Correlation Between Marathon Gold and Royal Gold

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

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

Diversification Opportunities for Marathon Gold and Royal Gold

0.0

Correlation Coefficient

Marathon Gold  Royal Gold

Pay attention - limited upside

The 3 months correlation between Marathon and Royal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Gold and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and Marathon Gold 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 Marathon Gold 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 Marathon Gold i.e., Marathon Gold and Royal Gold go up and down completely randomly.

Pair Corralation between Marathon Gold and Royal Gold

If you would invest  13,061  in Royal Gold on December 30, 2024 and sell it today you would earn a total of  3,158  from holding Royal Gold or generate 24.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Marathon Gold  vs.  Royal Gold

Marathon Gold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marathon Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marathon Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Royal Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Gold are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Royal Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marathon Gold and Royal Gold

The main advantage of trading using opposite Marathon Gold and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marathon Gold 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 Marathon Gold 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.