Correlation Between Royal Gold and NV Bekaert
Can any of the company-specific risk be diversified away by investing in both Royal Gold and NV Bekaert 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 Royal Gold and NV Bekaert into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Gold and NV Bekaert SA, you can compare the effects of market volatilities on Royal Gold and NV Bekaert 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 Royal Gold with a short position of NV Bekaert. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and NV Bekaert.
Diversification Opportunities for Royal Gold and NV Bekaert
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Royal and BEKAY is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and NV Bekaert SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV Bekaert SA and Royal 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 Royal Gold are associated (or correlated) with NV Bekaert. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV Bekaert SA has no effect on the direction of Royal Gold i.e., Royal Gold and NV Bekaert go up and down completely randomly.
Pair Corralation between Royal Gold and NV Bekaert
Given the investment horizon of 90 days Royal Gold is expected to generate 1.04 times more return on investment than NV Bekaert. However, Royal Gold is 1.04 times more volatile than NV Bekaert SA. It trades about 0.08 of its potential returns per unit of risk. NV Bekaert SA is currently generating about -0.13 per unit of risk. If you would invest 12,785 in Royal Gold on September 1, 2024 and sell it today you would earn a total of 1,841 from holding Royal Gold or generate 14.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Royal Gold vs. NV Bekaert SA
Performance |
| Timeline |
| Royal Gold |
| NV Bekaert SA |
Royal Gold and NV Bekaert Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and NV Bekaert
The main advantage of trading using opposite Royal Gold and NV Bekaert positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Gold position performs unexpectedly, NV Bekaert 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 NV Bekaert will offset losses from the drop in NV Bekaert's long position.| Royal Gold vs. Wheaton Precious Metals | Royal Gold vs. Agnico Eagle Mines | Royal Gold vs. Sandstorm Gold Ltd | Royal Gold vs. Osisko Gold Ro |
| NV Bekaert vs. Carpenter Technology | NV Bekaert vs. Mueller Industries | NV Bekaert vs. Allegheny Technologies Incorporated | NV Bekaert vs. ESAB 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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