Correlation Between Gold Royalty and Dakota Gold

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

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

Diversification Opportunities for Gold Royalty and Dakota Gold

0.61

Correlation Coefficient

Gold Royalty  Dakota Gold

Poor diversification

The 3 months correlation between Gold and Dakota is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp and Gold 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 Gold Royalty Corp are associated (or correlated) with Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of Gold Royalty i.e., Gold Royalty and Dakota Gold go up and down completely randomly.

Pair Corralation between Gold Royalty and Dakota Gold

Given the investment horizon of 90 days Gold Royalty Corp is expected to generate 1.01 times more return on investment than Dakota Gold. However, Gold Royalty is 1.01 times more volatile than Dakota Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Dakota Gold Corp is currently generating about 0.03 per unit of risk. If you would invest  124.00  in Gold Royalty Corp on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Gold Royalty Corp or generate 6.45% return on investment over 90 days.

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

Gold Royalty Corp  vs.  Dakota Gold Corp

Gold Royalty Corp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Dakota Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dakota Gold is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gold Royalty and Dakota Gold

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

The idea behind Gold Royalty Corp and Dakota Gold 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.