Correlation Between Liberty Gold and Gold Royalty
Can any of the company-specific risk be diversified away by investing in both Liberty Gold 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 Liberty Gold and Gold Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Gold Corp and Gold Royalty Corp, you can compare the effects of market volatilities on Liberty Gold 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 Liberty Gold with a short position of Gold Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Gold and Gold Royalty.
Diversification Opportunities for Liberty Gold and Gold Royalty
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Liberty and Gold is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Gold Corp 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 Liberty Gold 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 Liberty Gold Corp 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 Liberty Gold i.e., Liberty Gold and Gold Royalty go up and down completely randomly.
Pair Corralation between Liberty Gold and Gold Royalty
Assuming the 90 days trading horizon Liberty Gold Corp is expected to under-perform the Gold Royalty. In addition to that, Liberty Gold is 2.09 times more volatile than Gold Royalty Corp. It trades about -0.13 of its total potential returns per unit of risk. Gold Royalty Corp is currently generating about -0.24 per unit of volatility. If you would invest 147.00 in Gold Royalty Corp on September 1, 2024 and sell it today you would lose (18.00) from holding Gold Royalty Corp or give up 12.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Liberty Gold Corp vs. Gold Royalty Corp
Performance |
| Timeline |
| Liberty Gold Corp |
| Gold Royalty Corp |
Liberty Gold and Gold Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Gold and Gold Royalty
The main advantage of trading using opposite Liberty Gold and Gold Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Gold 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.| Liberty Gold vs. First Majestic Silver | Liberty Gold vs. Ivanhoe Energy | Liberty Gold vs. Orezone Gold Corp | Liberty Gold vs. Faraday Copper Corp |
| Gold Royalty vs. Endeavour Silver Corp | Gold Royalty vs. SilverCrest Metals | Gold Royalty vs. Platinum Group Metals | Gold Royalty vs. New Pacific Metals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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