Correlation Between EMX Royalty and Teck Resources
Can any of the company-specific risk be diversified away by investing in both EMX Royalty and Teck Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining EMX Royalty and Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMX Royalty Corp and Teck Resources Ltd, you can compare the effects of market volatilities on EMX Royalty and Teck Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in EMX Royalty with a short position of Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and Teck Resources.
Diversification Opportunities for EMX Royalty and Teck Resources
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMX and Teck is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Teck Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources and EMX Royalty is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on EMX Royalty Corp are associated (or correlated) with Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of EMX Royalty i.e., EMX Royalty and Teck Resources go up and down completely randomly.
Pair Corralation between EMX Royalty and Teck Resources
Considering the 90-day investment horizon EMX Royalty Corp is expected to under-perform the Teck Resources. But the stock apears to be less risky and, when comparing its historical volatility, EMX Royalty Corp is 1.1 times less risky than Teck Resources. The stock trades about -0.21 of its potential returns per unit of risk. The Teck Resources Ltd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,774 in Teck Resources Ltd on August 27, 2024 and sell it today you would lose (64.00) from holding Teck Resources Ltd or give up 1.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMX Royalty Corp vs. Teck Resources Ltd
Performance |
| Timeline |
| EMX Royalty Corp |
| Teck Resources |
EMX Royalty and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMX Royalty and Teck Resources
The main advantage of trading using opposite EMX Royalty and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty position performs unexpectedly, Teck Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Teck Resources will offset losses from the drop in Teck Resources' long position.| EMX Royalty vs. Metalla Royalty Streaming | EMX Royalty vs. Osisko Gold Ro | EMX Royalty vs. Equinox Gold Corp | EMX Royalty vs. SilverCrest Metals |
| Teck Resources vs. Rio Tinto ADR | Teck Resources vs. Vale SA ADR | Teck Resources vs. MP Materials Corp | Teck Resources vs. Lithium Americas Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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