Correlation Between Solar Alliance and Metalla Royalty

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

By analyzing existing cross correlation between Solar Alliance Energy and Metalla Royalty Streaming, you can compare the effects of market volatilities on Solar Alliance and Metalla 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 Solar Alliance with a short position of Metalla Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solar Alliance and Metalla Royalty.

Diversification Opportunities for Solar Alliance and Metalla Royalty

-0.05

Correlation Coefficient

Solar Alliance  Metalla Royalty

Good diversification

The 3 months correlation between Solar and Metalla is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Solar Alliance Energy and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming and Solar Alliance 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 Solar Alliance Energy are associated (or correlated) with Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of Solar Alliance i.e., Solar Alliance and Metalla Royalty go up and down completely randomly.

Pair Corralation between Solar Alliance and Metalla Royalty

Assuming the 90 days trading horizon Solar Alliance is expected to generate 1.08 times less return on investment than Metalla Royalty. In addition to that, Solar Alliance is 3.76 times more volatile than Metalla Royalty Streaming. It trades about 0.02 of its total potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.08 per unit of volatility. If you would invest  379.00  in Metalla Royalty Streaming on August 31, 2024 and sell it today you would earn a total of  50.00  from holding Metalla Royalty Streaming or generate 13.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Solar Alliance Energy  vs.  Metalla Royalty Streaming

Solar Alliance Energy

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solar Alliance Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Solar Alliance showed solid returns over the last few months and may actually be approaching a breakup point.

Metalla Royalty Streaming

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Metalla Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solar Alliance and Metalla Royalty

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

The idea behind Solar Alliance Energy and Metalla Royalty Streaming 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.