Correlation Between Royal Gold and ArcelorMittal
Can any of the company-specific risk be diversified away by investing in both Royal Gold and ArcelorMittal 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 ArcelorMittal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Gold and ArcelorMittal SA ADR, you can compare the effects of market volatilities on Royal Gold and ArcelorMittal 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 ArcelorMittal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and ArcelorMittal.
Diversification Opportunities for Royal Gold and ArcelorMittal
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Royal and ArcelorMittal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR 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 ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Royal Gold i.e., Royal Gold and ArcelorMittal go up and down completely randomly.
Pair Corralation between Royal Gold and ArcelorMittal
Given the investment horizon of 90 days Royal Gold is expected to generate 0.91 times more return on investment than ArcelorMittal. However, Royal Gold is 1.1 times less risky than ArcelorMittal. It trades about 0.03 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.0 per unit of risk. If you would invest 11,389 in Royal Gold on September 23, 2024 and sell it today you would earn a total of 1,992 from holding Royal Gold or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Gold vs. ArcelorMittal SA ADR
Performance |
| Timeline |
| Royal Gold |
| ArcelorMittal SA ADR |
Royal Gold and ArcelorMittal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and ArcelorMittal
The main advantage of trading using opposite Royal Gold and ArcelorMittal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Gold position performs unexpectedly, ArcelorMittal 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 ArcelorMittal will offset losses from the drop in ArcelorMittal'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 |
| ArcelorMittal vs. Wheaton Precious Metals | ArcelorMittal vs. Royal Gold | ArcelorMittal vs. Agnico Eagle Mines | ArcelorMittal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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