Correlation Between EMX Royalty and GoldMining

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

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

Diversification Opportunities for EMX Royalty and GoldMining

0.47

Correlation Coefficient

EMX Royalty  GoldMining

Very weak diversification

The 3 months correlation between EMX and GoldMining is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and EMX 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 EMX Royalty Corp are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of EMX Royalty i.e., EMX Royalty and GoldMining go up and down completely randomly.

Pair Corralation between EMX Royalty and GoldMining

Assuming the 90 days horizon EMX Royalty Corp is expected to generate 0.83 times more return on investment than GoldMining. However, EMX Royalty Corp is 1.21 times less risky than GoldMining. It trades about 0.1 of its potential returns per unit of risk. GoldMining is currently generating about 0.0 per unit of risk. If you would invest  217.00  in EMX Royalty Corp on September 4, 2024 and sell it today you would earn a total of  27.00  from holding EMX Royalty Corp or generate 12.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EMX Royalty Corp  vs.  GoldMining

EMX Royalty Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EMX Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, GoldMining is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EMX Royalty and GoldMining

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

The idea behind EMX Royalty Corp and GoldMining 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.