Correlation Between Gold Royalty and GoldMining
Can any of the company-specific risk be diversified away by investing in both Gold Royalty and GoldMining 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 Gold Royalty and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Royalty Corp and GoldMining, you can compare the effects of market volatilities on Gold Royalty and GoldMining 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 Gold Royalty with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Royalty and GoldMining.
Diversification Opportunities for Gold Royalty and GoldMining
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gold and GoldMining is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and Gold 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 Gold Royalty Corp are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Gold Royalty i.e., Gold Royalty and GoldMining go up and down completely randomly.
Pair Corralation between Gold Royalty and GoldMining
Given the investment horizon of 90 days Gold Royalty Corp is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Gold Royalty Corp is 1.07 times less risky than GoldMining. The stock trades about -0.3 of its potential returns per unit of risk. The GoldMining is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 93.00 in GoldMining on August 28, 2024 and sell it today you would lose (7.00) from holding GoldMining or give up 7.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Royalty Corp vs. GoldMining
Performance |
| Timeline |
| Gold Royalty Corp |
| GoldMining |
Gold Royalty and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Royalty and GoldMining
The main advantage of trading using opposite Gold Royalty and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Royalty position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Gold Royalty vs. Endeavour Silver Corp | Gold Royalty vs. SilverCrest Metals | Gold Royalty vs. Platinum Group Metals | Gold Royalty vs. New Pacific Metals |
| GoldMining vs. Gold Royalty Corp | GoldMining vs. Uranium Royalty Corp | GoldMining vs. Metalla Royalty Streaming | GoldMining vs. Equinox Gold 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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