Correlation Between New Gold and Metalla Royalty
Can any of the company-specific risk be diversified away by investing in both New Gold 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 New Gold and Metalla Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Metalla Royalty Streaming, you can compare the effects of market volatilities on New Gold 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 New Gold with a short position of Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Metalla Royalty.
Diversification Opportunities for New Gold and Metalla Royalty
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Metalla is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding New Gold 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 New 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 New Gold 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 New Gold i.e., New Gold and Metalla Royalty go up and down completely randomly.
Pair Corralation between New Gold and Metalla Royalty
Considering the 90-day investment horizon New Gold is expected to generate 0.89 times more return on investment than Metalla Royalty. However, New Gold is 1.12 times less risky than Metalla Royalty. It trades about -0.04 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.23 per unit of risk. If you would invest 285.00 in New Gold on August 31, 2024 and sell it today you would lose (11.00) from holding New Gold or give up 3.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. Metalla Royalty Streaming
Performance |
| Timeline |
| New Gold |
| Metalla Royalty Streaming |
New Gold and Metalla Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Metalla Royalty
The main advantage of trading using opposite New Gold and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold 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.| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
| Metalla Royalty vs. Endeavour Silver Corp | Metalla Royalty vs. Fortuna Silver Mines | Metalla Royalty vs. New Gold | Metalla Royalty vs. Sandstorm Gold Ltd |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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