Correlation Between Royal Gold and Contango ORE
Can any of the company-specific risk be diversified away by investing in both Royal Gold and Contango ORE 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 Contango ORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Gold and Contango ORE, you can compare the effects of market volatilities on Royal Gold and Contango ORE 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 Contango ORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and Contango ORE.
Diversification Opportunities for Royal Gold and Contango ORE
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Contango is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and Contango ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contango ORE 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 Contango ORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contango ORE has no effect on the direction of Royal Gold i.e., Royal Gold and Contango ORE go up and down completely randomly.
Pair Corralation between Royal Gold and Contango ORE
Given the investment horizon of 90 days Royal Gold is expected to generate 0.39 times more return on investment than Contango ORE. However, Royal Gold is 2.57 times less risky than Contango ORE. It trades about 0.28 of its potential returns per unit of risk. Contango ORE is currently generating about 0.04 per unit of risk. If you would invest 13,625 in Royal Gold on November 9, 2024 and sell it today you would earn a total of 870.00 from holding Royal Gold or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Gold vs. Contango ORE
Performance |
| Timeline |
| Royal Gold |
| Contango ORE |
Royal Gold and Contango ORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and Contango ORE
The main advantage of trading using opposite Royal Gold and Contango ORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Gold position performs unexpectedly, Contango ORE 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 Contango ORE will offset losses from the drop in Contango ORE'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 |
| Contango ORE vs. First Guaranty Bancshares | Contango ORE vs. Glen Burnie Bancorp | Contango ORE vs. Princeton Capital |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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