Correlation Between Kinross Gold and Royal Gold

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Can any of the company-specific risk be diversified away by investing in both Kinross Gold and Royal 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 Kinross Gold and Royal Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinross Gold and Royal Gold, you can compare the effects of market volatilities on Kinross Gold and Royal 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 Kinross Gold with a short position of Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinross Gold and Royal Gold.

Diversification Opportunities for Kinross Gold and Royal Gold

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Kinross and Royal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kinross Gold and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and Kinross 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 Kinross Gold are associated (or correlated) with Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of Kinross Gold i.e., Kinross Gold and Royal Gold go up and down completely randomly.

Pair Corralation between Kinross Gold and Royal Gold

Considering the 90-day investment horizon Kinross Gold is expected to generate 1.05 times more return on investment than Royal Gold. However, Kinross Gold is 1.05 times more volatile than Royal Gold. It trades about 0.46 of its potential returns per unit of risk. Royal Gold is currently generating about 0.35 per unit of risk. If you would invest  475.00  in Kinross Gold on December 30, 2023 and sell it today you would earn a total of  138.00  from holding Kinross Gold or generate 29.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Kinross Gold  vs.  Royal Gold

 Performance 
       Timeline  
Kinross Gold 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Kinross Gold are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Kinross Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Royal Gold 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Royal Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Royal Gold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Kinross Gold and Royal Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kinross Gold and Royal Gold

The main advantage of trading using opposite Kinross Gold and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinross Gold position performs unexpectedly, Royal 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 Royal Gold will offset losses from the drop in Royal Gold's long position.
The idea behind Kinross Gold and Royal 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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