Correlation Between Québec Nickel and EMX Royalty

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

By analyzing existing cross correlation between Qubec Nickel Corp and EMX Royalty Corp, you can compare the effects of market volatilities on Québec Nickel and EMX Royalty 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 Québec Nickel with a short position of EMX Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Québec Nickel and EMX Royalty.

Diversification Opportunities for Québec Nickel and EMX Royalty

0.17

Correlation Coefficient

Québec Nickel  EMX Royalty

Average diversification

The 3 months correlation between Québec and EMX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Qubec Nickel Corp and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty Corp and Québec Nickel 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 Qubec Nickel Corp are associated (or correlated) with EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Québec Nickel i.e., Québec Nickel and EMX Royalty go up and down completely randomly.

Pair Corralation between Québec Nickel and EMX Royalty

Assuming the 90 days horizon Qubec Nickel Corp is expected to under-perform the EMX Royalty. In addition to that, Québec Nickel is 11.18 times more volatile than EMX Royalty Corp. It trades about -0.12 of its total potential returns per unit of risk. EMX Royalty Corp is currently generating about -0.08 per unit of volatility. If you would invest  179.00  in EMX Royalty Corp on September 4, 2024 and sell it today you would lose (6.00) from holding EMX Royalty Corp or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Qubec Nickel Corp  vs.  EMX Royalty Corp

Qubec Nickel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Qubec Nickel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

EMX Royalty Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, EMX Royalty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Québec Nickel and EMX Royalty

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

The idea behind Qubec Nickel Corp and EMX Royalty 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.