Correlation Between Royal Gold and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Royal Gold and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Gold and Harmony Gold Mining, you can compare the effects of market volatilities on Royal Gold and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and Harmony Gold.
Diversification Opportunities for Royal Gold and Harmony Gold
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Royal and Harmony is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Royal Gold i.e., Royal Gold and Harmony Gold go up and down completely randomly.
Pair Corralation between Royal Gold and Harmony Gold
Given the investment horizon of 90 days Royal Gold is expected to generate 0.75 times more return on investment than Harmony Gold. However, Royal Gold is 1.33 times less risky than Harmony Gold. It trades about -0.2 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.16 per unit of risk. If you would invest 14,488 in Royal Gold on September 24, 2024 and sell it today you would lose (1,184) from holding Royal Gold or give up 8.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Gold vs. Harmony Gold Mining
Performance |
| Timeline |
| Royal Gold |
| Harmony Gold Mining |
Royal Gold and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and Harmony Gold
The main advantage of trading using opposite Royal Gold and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Gold position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold'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 |
| Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Royal Gold | Harmony Gold vs. Gold Fields Ltd | Harmony Gold vs. SSR Mining |
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 Stocks Directory module to find actively traded stocks across global markets.
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