Correlation Between Gold Royalty and GoldMining

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

Diversification Opportunities for Gold Royalty and GoldMining

0.62

Correlation Coefficient

Gold Royalty  GoldMining

Poor diversification

The 3 months correlation between Gold and GoldMining is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 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 Gold Royalty i.e., Gold Royalty and GoldMining go up and down completely randomly.

Pair Corralation between Gold Royalty and GoldMining

Given the investment horizon of 90 days Gold Royalty Corp is expected to generate 1.51 times more return on investment than GoldMining. However, Gold Royalty is 1.51 times more volatile than GoldMining. It trades about 0.12 of its potential returns per unit of risk. GoldMining is currently generating about 0.05 per unit of risk. If you would invest  118.00  in Gold Royalty Corp on December 29, 2024 and sell it today you would earn a total of  26.00  from holding Gold Royalty Corp or generate 22.03% 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.  GoldMining

Gold Royalty Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Gold Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

GoldMining

Risk-Adjusted Performance

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. Despite nearly weak fundamental indicators, GoldMining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gold Royalty and GoldMining

The main advantage of trading using opposite Gold Royalty and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold 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 Gold 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.