Correlation Between Gold Royalty and Hecla Mining

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

Diversification Opportunities for Gold Royalty and Hecla Mining

0.64

Correlation Coefficient

Gold Royalty  Hecla Mining

Poor diversification

The 3 months correlation between Gold and Hecla is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Gold Royalty i.e., Gold Royalty and Hecla Mining go up and down completely randomly.

Pair Corralation between Gold Royalty and Hecla Mining

Given the investment horizon of 90 days Gold Royalty Corp is expected to generate 0.92 times more return on investment than Hecla Mining. However, Gold Royalty Corp is 1.09 times less risky than Hecla Mining. It trades about 0.1 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.08 per unit of risk. If you would invest  122.00  in Gold Royalty Corp on December 25, 2024 and sell it today you would earn a total of  22.00  from holding Gold Royalty Corp or generate 18.03% 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.  Hecla Mining

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 8 (%) 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.

Hecla Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hecla Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, Hecla Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Royalty and Hecla Mining

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

The idea behind Gold Royalty Corp and Hecla Mining 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.