Correlation Between Royal Road and Fremont Gold
Can any of the company-specific risk be diversified away by investing in both Royal Road and Fremont 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 Road and Fremont Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Road Minerals and Fremont Gold, you can compare the effects of market volatilities on Royal Road and Fremont 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 Road with a short position of Fremont Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Road and Fremont Gold.
Diversification Opportunities for Royal Road and Fremont Gold
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Royal and Fremont is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Royal Road Minerals and Fremont Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fremont Gold and Royal Road 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 Road Minerals are associated (or correlated) with Fremont Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fremont Gold has no effect on the direction of Royal Road i.e., Royal Road and Fremont Gold go up and down completely randomly.
Pair Corralation between Royal Road and Fremont Gold
Assuming the 90 days horizon Royal Road Minerals is expected to under-perform the Fremont Gold. But the stock apears to be less risky and, when comparing its historical volatility, Royal Road Minerals is 5.13 times less risky than Fremont Gold. The stock trades about -0.16 of its potential returns per unit of risk. The Fremont Gold is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Fremont Gold on November 2, 2024 and sell it today you would earn a total of 2.50 from holding Fremont Gold or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 23.81% |
| Values | Daily Returns |
Royal Road Minerals vs. Fremont Gold
Performance |
| Timeline |
| Royal Road Minerals |
| Fremont Gold |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Royal Road and Fremont Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Road and Fremont Gold
The main advantage of trading using opposite Royal Road and Fremont Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Road position performs unexpectedly, Fremont 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 Fremont Gold will offset losses from the drop in Fremont Gold's long position.The idea behind Royal Road Minerals and Fremont Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fremont Gold vs. Tesoro Minerals Corp | Fremont Gold vs. Palamina Corp | Fremont Gold vs. Empire Metals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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