Correlation Between Metalla Royalty and Sonoro Gold

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

Diversification Opportunities for Metalla Royalty and Sonoro Gold

0.09

Correlation Coefficient

Metalla Royalty  Sonoro Gold

Significant diversification

The 3 months correlation between Metalla and Sonoro is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Metalla Royalty Streaming and Sonoro Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoro Gold Corp 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 Sonoro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoro Gold Corp has no effect on the direction of Metalla Royalty i.e., Metalla Royalty and Sonoro Gold go up and down completely randomly.

Pair Corralation between Metalla Royalty and Sonoro Gold

Considering the 90-day investment horizon Metalla Royalty Streaming is expected to under-perform the Sonoro Gold. But the stock apears to be less risky and, when comparing its historical volatility, Metalla Royalty Streaming is 2.64 times less risky than Sonoro Gold. The stock trades about -0.04 of its potential returns per unit of risk. The Sonoro Gold Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3.24  in Sonoro Gold Corp on September 12, 2024 and sell it today you would earn a total of  3.71  from holding Sonoro Gold Corp or generate 114.51% return on investment over 90 days.

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

Metalla Royalty Streaming  vs.  Sonoro Gold Corp

Metalla Royalty Streaming

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Sonoro Gold Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sonoro Gold Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Sonoro Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalla Royalty and Sonoro Gold

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

The idea behind Metalla Royalty Streaming and Sonoro Gold Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.