Correlation Between Eagle Plains and EMX Royalty

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

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

Diversification Opportunities for Eagle Plains and EMX Royalty

-0.43

Correlation Coefficient

Eagle Plains  EMX Royalty

Very good diversification

The 3 months correlation between Eagle and EMX is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty Corp and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Eagle Plains i.e., Eagle Plains and EMX Royalty go up and down completely randomly.

Pair Corralation between Eagle Plains and EMX Royalty

Assuming the 90 days horizon Eagle Plains Resources is expected to under-perform the EMX Royalty. In addition to that, Eagle Plains is 1.72 times more volatile than EMX Royalty Corp. It trades about -0.03 of its total potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.1 per unit of volatility. 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 Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Eagle Plains Resources  vs.  EMX Royalty Corp

Eagle Plains Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Plains Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eagle Plains is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Eagle Plains and EMX Royalty

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

The idea behind Eagle Plains Resources and EMX Royalty Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.