Correlation Between I 80 and Royal Gold

Can any of the company-specific risk be diversified away by investing in both I 80 and Royal 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 I 80 and Royal Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between I 80 Gold Corp and Royal Gold, you can compare the effects of market volatilities on I 80 and Royal 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 I 80 with a short position of Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of I 80 and Royal Gold.

Diversification Opportunities for I 80 and Royal Gold

0.31

Correlation Coefficient

I 80  Royal Gold

Weak diversification

The 3 months correlation between IAUX and Royal is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding I 80 Gold Corp and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and I 80 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 I 80 Gold Corp are associated (or correlated) with Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of I 80 i.e., I 80 and Royal Gold go up and down completely randomly.

Pair Corralation between I 80 and Royal Gold

Given the investment horizon of 90 days I 80 Gold Corp is expected to under-perform the Royal Gold. In addition to that, I 80 is 5.6 times more volatile than Royal Gold. It trades about -0.04 of its total potential returns per unit of risk. Royal Gold is currently generating about -0.02 per unit of volatility. If you would invest  13,897  in Royal Gold on October 4, 2024 and sell it today you would lose (443.00) from holding Royal Gold or give up 3.19% of portfolio value over 90 days.

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

I 80 Gold Corp  vs.  Royal Gold

I 80 Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I 80 Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Royal Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Royal Gold is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with I 80 and Royal Gold

The main advantage of trading using opposite I 80 and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I 80 position performs unexpectedly, Royal 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 Royal Gold will offset losses from the drop in Royal Gold's long position.

The idea behind I 80 Gold Corp and Royal Gold 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.