Correlation Between SSR Mining and Royal Gold

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

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

Diversification Opportunities for SSR Mining and Royal Gold

0.29

Correlation Coefficient

SSR Mining  Royal Gold

Modest diversification

The 3 months correlation between SSR and Royal is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding SSR Mining and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and SSR Mining 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 SSR Mining are associated (or correlated) with Royal Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Gold has no effect on the direction of SSR Mining i.e., SSR Mining and Royal Gold go up and down completely randomly.

Pair Corralation between SSR Mining and Royal Gold

Given the investment horizon of 90 days SSR Mining is expected to generate 2.16 times more return on investment than Royal Gold. However, SSR Mining is 2.16 times more volatile than Royal Gold. It trades about 0.24 of its potential returns per unit of risk. Royal Gold is currently generating about -0.19 per unit of risk. If you would invest  576.00  in SSR Mining on September 24, 2024 and sell it today you would earn a total of  119.00  from holding SSR Mining or generate 20.66% return on investment over 90 days.

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

SSR Mining  vs.  Royal Gold

SSR Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSR Mining are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, SSR Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SSR Mining and Royal Gold

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

The idea behind SSR Mining and Royal Gold 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.