Correlation Between Metalla Royalty and Hecla Mining

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

Diversification Opportunities for Metalla Royalty and Hecla Mining

0.79

Correlation Coefficient

Metalla Royalty  Hecla Mining

Poor diversification

The 3 months correlation between Metalla and Hecla is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining and Metalla 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 Metalla Royalty Streaming 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 Metalla Royalty i.e., Metalla Royalty and Hecla Mining go up and down completely randomly.

Pair Corralation between Metalla Royalty and Hecla Mining

Considering the 90-day investment horizon Metalla Royalty Streaming is expected to generate 0.73 times more return on investment than Hecla Mining. However, Metalla Royalty Streaming is 1.37 times less risky than Hecla Mining. It trades about 0.13 of its potential returns per unit of risk. Hecla Mining is currently generating about 0.0 per unit of risk. If you would invest  271.00  in Metalla Royalty Streaming on November 28, 2024 and sell it today you would earn a total of  21.00  from holding Metalla Royalty Streaming or generate 7.75% return on investment over 90 days.

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

Metalla Royalty Streaming  vs.  Hecla Mining

Metalla Royalty Streaming

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalla Royalty Streaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Metalla Royalty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hecla Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hecla Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Hecla Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Metalla Royalty and Hecla Mining

The main advantage of trading using opposite Metalla Royalty and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalla 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 Metalla Royalty Streaming 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.