Correlation Between Royal Bank and Eminent Gold
Can any of the company-specific risk be diversified away by investing in both Royal Bank and Eminent 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 Bank and Eminent Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Bank of and Eminent Gold Corp, you can compare the effects of market volatilities on Royal Bank and Eminent 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 Bank with a short position of Eminent Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Bank and Eminent Gold.
Diversification Opportunities for Royal Bank and Eminent Gold
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and Eminent is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Royal Bank of and Eminent Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eminent Gold Corp and Royal Bank 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 Bank of are associated (or correlated) with Eminent Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eminent Gold Corp has no effect on the direction of Royal Bank i.e., Royal Bank and Eminent Gold go up and down completely randomly.
Pair Corralation between Royal Bank and Eminent Gold
Assuming the 90 days horizon Royal Bank of is expected to generate 0.24 times more return on investment than Eminent Gold. However, Royal Bank of is 4.2 times less risky than Eminent Gold. It trades about 0.11 of its potential returns per unit of risk. Eminent Gold Corp is currently generating about -0.2 per unit of risk. If you would invest 17,120 in Royal Bank of on August 25, 2024 and sell it today you would earn a total of 351.00 from holding Royal Bank of or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Bank of vs. Eminent Gold Corp
Performance |
| Timeline |
| Royal Bank |
| Eminent Gold Corp |
Royal Bank and Eminent Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Bank and Eminent Gold
The main advantage of trading using opposite Royal Bank and Eminent Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Bank position performs unexpectedly, Eminent 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 Eminent Gold will offset losses from the drop in Eminent Gold's long position.| Royal Bank vs. Toronto Dominion Bank | Royal Bank vs. Bank of Nova | Royal Bank vs. Bank of Montreal | Royal Bank vs. Canadian Imperial Bank |
| Eminent Gold vs. First Majestic Silver | Eminent Gold vs. Ivanhoe Energy | Eminent Gold vs. Orezone Gold Corp | Eminent Gold vs. Faraday Copper 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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