Correlation Between Royal Gold and Taseko Mines

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

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

Diversification Opportunities for Royal Gold and Taseko Mines

-0.06

Correlation Coefficient

Royal Gold  Taseko Mines

Good diversification

The 3 months correlation between Royal and Taseko is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Royal Gold and Taseko Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taseko Mines and Royal 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 Royal Gold are associated (or correlated) with Taseko Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taseko Mines has no effect on the direction of Royal Gold i.e., Royal Gold and Taseko Mines go up and down completely randomly.

Pair Corralation between Royal Gold and Taseko Mines

Given the investment horizon of 90 days Royal Gold is expected to generate 4.46 times less return on investment than Taseko Mines. But when comparing it to its historical volatility, Royal Gold is 2.17 times less risky than Taseko Mines. It trades about 0.03 of its potential returns per unit of risk. Taseko Mines is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  123.00  in Taseko Mines on September 23, 2024 and sell it today you would earn a total of  75.00  from holding Taseko Mines or generate 60.98% return on investment over 90 days.

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

Royal Gold  vs.  Taseko Mines

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.

Taseko Mines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taseko Mines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Royal Gold and Taseko Mines

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

The idea behind Royal Gold and Taseko Mines 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..