Correlation Between GoldMining and Metalla Royalty

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

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

Diversification Opportunities for GoldMining and Metalla Royalty

0.4

Correlation Coefficient

GoldMining  Metalla Royalty

Very weak diversification

The 3 months correlation between GoldMining and Metalla is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and GoldMining 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 GoldMining are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of GoldMining i.e., GoldMining and Metalla Royalty go up and down completely randomly.

Pair Corralation between GoldMining and Metalla Royalty

Assuming the 90 days trading horizon GoldMining is expected to generate 2.24 times less return on investment than Metalla Royalty. But when comparing it to its historical volatility, GoldMining is 1.4 times less risky than Metalla Royalty. It trades about 0.04 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Metalla Royalty Streaming on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Metalla Royalty Streaming or generate 12.4% return on investment over 90 days.

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

GoldMining  vs.  Metalla Royalty Streaming

GoldMining

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GoldMining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Metalla Royalty Streaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Metalla Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoldMining and Metalla Royalty

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

The idea behind GoldMining and Metalla Royalty Streaming 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..