Correlation Between GoldMining and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both GoldMining and Metalla 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 GoldMining and Metalla Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Metalla Royalty Streaming, you can compare the effects of market volatilities on GoldMining and Metalla 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 GoldMining with a short position of Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Metalla Royalty.
Diversification Opportunities for GoldMining and Metalla Royalty
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GoldMining and Metalla is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and GoldMining 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 GoldMining are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of GoldMining i.e., GoldMining and Metalla Royalty go up and down completely randomly.
Pair Corralation between GoldMining and Metalla Royalty
Assuming the 90 days trading horizon GoldMining is expected to generate 1.9 times less return on investment than Metalla Royalty. But when comparing it to its historical volatility, GoldMining is 1.4 times less risky than Metalla Royalty. It trades about 0.06 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 379.00 in Metalla Royalty Streaming on August 31, 2024 and sell it today you would earn a total of 50.00 from holding Metalla Royalty Streaming or generate 13.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoldMining vs. Metalla Royalty Streaming
Performance |
| Timeline |
| GoldMining |
| Metalla Royalty Streaming |
GoldMining and Metalla Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Metalla Royalty
The main advantage of trading using opposite GoldMining and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Metalla 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 Metalla Royalty will offset losses from the drop in Metalla Royalty's long position.| GoldMining vs. First Mining Gold | GoldMining vs. Liberty Gold Corp | GoldMining vs. Equinox Gold Corp | GoldMining vs. SilverCrest Metals |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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