Correlation Between EMX Royalty and Orex Minerals

Can any of the company-specific risk be diversified away by investing in both EMX Royalty and Orex 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 EMX Royalty and Orex Minerals 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 Orex Minerals, you can compare the effects of market volatilities on EMX Royalty and Orex 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 EMX Royalty with a short position of Orex Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and Orex Minerals.

Diversification Opportunities for EMX Royalty and Orex Minerals

0.39

Correlation Coefficient

EMX Royalty  Orex Minerals

Weak diversification

The 3 months correlation between EMX and Orex is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Orex Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orex Minerals 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 Orex Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orex Minerals has no effect on the direction of EMX Royalty i.e., EMX Royalty and Orex Minerals go up and down completely randomly.

Pair Corralation between EMX Royalty and Orex Minerals

Assuming the 90 days horizon EMX Royalty Corp is expected to generate 0.2 times more return on investment than Orex Minerals. However, EMX Royalty Corp is 4.96 times less risky than Orex Minerals. It trades about -0.01 of its potential returns per unit of risk. Orex Minerals is currently generating about -0.01 per unit of risk. If you would invest  256.00  in EMX Royalty Corp on December 4, 2024 and sell it today you would lose (1.00) from holding EMX Royalty Corp or give up 0.39% of portfolio value over 90 days.

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

EMX Royalty Corp  vs.  Orex Minerals

EMX Royalty Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EMX Royalty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Orex Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Orex Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Orex Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMX Royalty and Orex Minerals

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

The idea behind EMX Royalty Corp and Orex 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.