Correlation Between Star Royalties and New Pacific
Can any of the company-specific risk be diversified away by investing in both Star Royalties and New Pacific 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 Star Royalties and New Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Royalties and New Pacific Metals, you can compare the effects of market volatilities on Star Royalties and New Pacific 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 Star Royalties with a short position of New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Royalties and New Pacific.
Diversification Opportunities for Star Royalties and New Pacific
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Star and New is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Star Royalties and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals and Star Royalties 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 Star Royalties are associated (or correlated) with New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Star Royalties i.e., Star Royalties and New Pacific go up and down completely randomly.
Pair Corralation between Star Royalties and New Pacific
Assuming the 90 days horizon Star Royalties is expected to generate 1.04 times more return on investment than New Pacific. However, Star Royalties is 1.04 times more volatile than New Pacific Metals. It trades about 0.01 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.01 per unit of risk. If you would invest 24.00 in Star Royalties on August 29, 2024 and sell it today you would lose (3.00) from holding Star Royalties or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Royalties vs. New Pacific Metals
Performance |
| Timeline |
| Star Royalties |
| New Pacific Metals |
Star Royalties and New Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Royalties and New Pacific
The main advantage of trading using opposite Star Royalties and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Royalties position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.| Star Royalties vs. Gemfields Group Limited | Star Royalties vs. Defiance Silver Corp | Star Royalties vs. Diamond Fields Resources | Star Royalties vs. GoGold Resources |
| New Pacific vs. Endeavour Silver Corp | New Pacific vs. Metalla Royalty Streaming | New Pacific vs. Hecla Mining | New Pacific vs. Gatos Silver |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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