Correlation Between Royal Gold and Meta Platforms
Can any of the company-specific risk be diversified away by investing in both Royal Gold and Meta Platforms 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 Meta Platforms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Gold and Meta Platforms, you can compare the effects of market volatilities on Royal Gold and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Gold and Meta Platforms.
Diversification Opportunities for Royal Gold and Meta Platforms
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royal and Meta is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of Royal Gold i.e., Royal Gold and Meta Platforms go up and down completely randomly.
Pair Corralation between Royal Gold and Meta Platforms
Given the investment horizon of 90 days Royal Gold is expected to generate 0.53 times more return on investment than Meta Platforms. However, Royal Gold is 1.88 times less risky than Meta Platforms. It trades about 0.01 of its potential returns per unit of risk. Meta Platforms is currently generating about -0.11 per unit of risk. If you would invest 12,795 in Royal Gold on January 18, 2024 and sell it today you would lose (495.00) from holding Royal Gold or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 8.48% |
| Values | Daily Returns |
Royal Gold vs. Meta Platforms
Performance |
| Timeline |
| Royal Gold |
| Meta Platforms |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Royal Gold and Meta Platforms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Gold and Meta Platforms
The main advantage of trading using opposite Royal Gold and Meta Platforms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Gold position performs unexpectedly, Meta Platforms 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 Meta Platforms will offset losses from the drop in Meta Platforms' long position.| Royal Gold vs. China Hongqiao Group | Royal Gold vs. Norsk Hydro ASA | Royal Gold vs. Aquagold International | Royal Gold vs. Thrivent High Yield |
| Meta Platforms vs. Meta Platforms | Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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