Correlation Between Equity Metals and Gold Royalty
Can any of the company-specific risk be diversified away by investing in both Equity Metals and Gold Royalty 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 Equity Metals and Gold Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Metals and Gold Royalty Corp, you can compare the effects of market volatilities on Equity Metals and Gold Royalty 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 Equity Metals with a short position of Gold Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Metals and Gold Royalty.
Diversification Opportunities for Equity Metals and Gold Royalty
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Equity and Gold is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals and Gold Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Royalty Corp and Equity Metals 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 Equity Metals are associated (or correlated) with Gold Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Royalty Corp has no effect on the direction of Equity Metals i.e., Equity Metals and Gold Royalty go up and down completely randomly.
Pair Corralation between Equity Metals and Gold Royalty
Assuming the 90 days horizon Equity Metals is expected to generate 2.67 times more return on investment than Gold Royalty. However, Equity Metals is 2.67 times more volatile than Gold Royalty Corp. It trades about 0.02 of its potential returns per unit of risk. Gold Royalty Corp is currently generating about -0.01 per unit of risk. If you would invest 17.00 in Equity Metals on November 28, 2024 and sell it today you would lose (4.00) from holding Equity Metals or give up 23.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Metals vs. Gold Royalty Corp
Performance |
| Timeline |
| Equity Metals |
| Gold Royalty Corp |
Equity Metals and Gold Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Metals and Gold Royalty
The main advantage of trading using opposite Equity Metals and Gold Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Metals position performs unexpectedly, Gold Royalty 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 Gold Royalty will offset losses from the drop in Gold Royalty's long position.| Equity Metals vs. Sierra Madre Gold | Equity Metals vs. Silver Wolf Exploration | Equity Metals vs. Western Alaska Minerals | Equity Metals vs. Summa Silver Corp |
| Gold Royalty vs. Endeavour Silver Corp | Gold Royalty vs. Platinum Group Metals | Gold Royalty vs. New Pacific Metals | Gold Royalty vs. Compania de Minas |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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