Correlation Between Gold Royalty and Triple Flag

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

Diversification Opportunities for Gold Royalty and Triple Flag

0.8

Correlation Coefficient

Gold Royalty  Triple Flag

Very poor diversification

The 3 months correlation between Gold and Triple is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Triple Flag Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Flag Precious 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 Triple Flag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Flag Precious has no effect on the direction of Gold Royalty i.e., Gold Royalty and Triple Flag go up and down completely randomly.

Pair Corralation between Gold Royalty and Triple Flag

Given the investment horizon of 90 days Gold Royalty Corp is expected to generate 1.29 times more return on investment than Triple Flag. However, Gold Royalty is 1.29 times more volatile than Triple Flag Precious. It trades about -0.17 of its potential returns per unit of risk. Triple Flag Precious is currently generating about -0.24 per unit of risk. If you would invest  127.00  in Gold Royalty Corp on September 27, 2024 and sell it today you would lose (10.00) from holding Gold Royalty Corp or give up 7.87% of portfolio value over 90 days.

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

Gold Royalty Corp  vs.  Triple Flag Precious

Gold Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Triple Flag Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Gold Royalty and Triple Flag

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

The idea behind Gold Royalty Corp and Triple Flag Precious 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 Valuation module to check real value of public entities based on technical and fundamental data.