Correlation Between Gold Royalty and Hycroft Mining

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Can any of the company-specific risk be diversified away by investing in both Gold Royalty and Hycroft Mining 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 Hycroft Mining 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 Hycroft Mining Holding, you can compare the effects of market volatilities on Gold Royalty and Hycroft Mining 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 Hycroft Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Royalty and Hycroft Mining.

Diversification Opportunities for Gold Royalty and Hycroft Mining

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Gold and Hycroft is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding 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 Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of Gold Royalty i.e., Gold Royalty and Hycroft Mining go up and down completely randomly.

Pair Corralation between Gold Royalty and Hycroft Mining

Given the investment horizon of 90 days Gold Royalty is expected to generate 1.06 times less return on investment than Hycroft Mining. But when comparing it to its historical volatility, Gold Royalty Corp is 1.05 times less risky than Hycroft Mining. It trades about 0.17 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Hycroft Mining Holding on December 29, 2023 and sell it today you would earn a total of  27.92  from holding Hycroft Mining Holding or generate 14.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Gold Royalty Corp  vs.  Hycroft Mining Holding

 Performance 
       Timeline  
Gold Royalty Corp 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gold Royalty showed solid returns over the last few months and may actually be approaching a breakup point.
Hycroft Mining Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Hycroft Mining Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Hycroft Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Gold Royalty and Hycroft Mining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Gold Royalty and Hycroft Mining

The main advantage of trading using opposite Gold Royalty and Hycroft Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Royalty position performs unexpectedly, Hycroft Mining 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 Hycroft Mining will offset losses from the drop in Hycroft Mining's long position.
The idea behind Gold Royalty Corp and Hycroft Mining Holding 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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