Correlation Between Gold Royalty and Golden Minerals

Can any of the company-specific risk be diversified away by investing in both Gold Royalty and Golden Minerals 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 Gold Royalty and Golden Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Royalty Corp and Golden Minerals, you can compare the effects of market volatilities on Gold Royalty and Golden Minerals 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 Gold Royalty with a short position of Golden Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Royalty and Golden Minerals.

Diversification Opportunities for Gold Royalty and Golden Minerals

0.16

Correlation Coefficient

Gold Royalty  Golden Minerals

Average diversification

The 3 months correlation between Gold and Golden is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Golden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Minerals and Gold Royalty 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 Gold Royalty Corp are associated (or correlated) with Golden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Minerals has no effect on the direction of Gold Royalty i.e., Gold Royalty and Golden Minerals go up and down completely randomly.

Pair Corralation between Gold Royalty and Golden Minerals

Given the investment horizon of 90 days Gold Royalty is expected to generate 14.76 times less return on investment than Golden Minerals. But when comparing it to its historical volatility, Gold Royalty Corp is 3.78 times less risky than Golden Minerals. It trades about 0.08 of its potential returns per unit of risk. Golden Minerals is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Golden Minerals on January 25, 2024 and sell it today you would earn a total of  28.00  from holding Golden Minerals or generate 93.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Gold Royalty Corp  vs.  Golden Minerals

Gold Royalty Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Gold Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

Golden Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Golden Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Royalty and Golden Minerals

The main advantage of trading using opposite Gold Royalty and Golden Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Royalty position performs unexpectedly, Golden Minerals 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 Golden Minerals will offset losses from the drop in Golden Minerals' long position.

The idea behind Gold Royalty Corp and Golden Minerals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.