Correlation Between Elemental Royalties and Gander Gold

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

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

Diversification Opportunities for Elemental Royalties and Gander Gold

0.27

Correlation Coefficient

Elemental Royalties  Gander Gold

Modest diversification

The 3 months correlation between Elemental and Gander is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Elemental Royalties Corp and Gander Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gander Gold and Elemental 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 Elemental Royalties Corp are associated (or correlated) with Gander Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gander Gold has no effect on the direction of Elemental Royalties i.e., Elemental Royalties and Gander Gold go up and down completely randomly.

Pair Corralation between Elemental Royalties and Gander Gold

Assuming the 90 days horizon Elemental Royalties is expected to generate 1.82 times less return on investment than Gander Gold. But when comparing it to its historical volatility, Elemental Royalties Corp is 6.73 times less risky than Gander Gold. It trades about 0.13 of its potential returns per unit of risk. Gander Gold is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Gander Gold on December 30, 2024 and sell it today you would lose (2.50) from holding Gander Gold or give up 22.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Elemental Royalties Corp  vs.  Gander Gold

Elemental Royalties Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elemental Royalties Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Elemental Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Gander Gold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gander Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Gander Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elemental Royalties and Gander Gold

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

The idea behind Elemental Royalties Corp and Gander 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.