Correlation Between Star Royalties and Metalla Royalty

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

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

Diversification Opportunities for Star Royalties and Metalla Royalty

0.17

Correlation Coefficient

Star Royalties  Metalla Royalty

Average diversification

The 3 months correlation between Star and Metalla is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Star Royalties 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 Star Royalties 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 Star Royalties 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 Star Royalties i.e., Star Royalties and Metalla Royalty go up and down completely randomly.

Pair Corralation between Star Royalties and Metalla Royalty

Assuming the 90 days horizon Star Royalties is expected to under-perform the Metalla Royalty. In addition to that, Star Royalties is 1.19 times more volatile than Metalla Royalty Streaming. It trades about -0.03 of its total potential returns per unit of risk. Metalla Royalty Streaming is currently generating about 0.09 per unit of volatility. If you would invest  254.00  in Metalla Royalty Streaming on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Metalla Royalty Streaming or generate 16.14% return on investment over 90 days.

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

Star Royalties  vs.  Metalla Royalty Streaming

Star Royalties

Risk-Adjusted Performance

Very Weak

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

Metalla Royalty Streaming

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metalla Royalty Streaming are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Metalla Royalty sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Star Royalties and Metalla Royalty

The main advantage of trading using opposite Star Royalties and Metalla Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Royalties 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 Star Royalties 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.