Correlation Between Triple Flag and Gold Royalty

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

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

Diversification Opportunities for Triple Flag and Gold Royalty

0.8

Correlation Coefficient

Triple Flag  Gold Royalty

Very poor diversification

The 3 months correlation between Triple and Gold is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Gold Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Royalty Corp and Triple Flag 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 Triple Flag Precious are associated (or correlated) with Gold Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Royalty Corp has no effect on the direction of Triple Flag i.e., Triple Flag and Gold Royalty go up and down completely randomly.

Pair Corralation between Triple Flag and Gold Royalty

Given the investment horizon of 90 days Triple Flag Precious is expected to generate 0.64 times more return on investment than Gold Royalty. However, Triple Flag Precious is 1.55 times less risky than Gold Royalty. It trades about 0.02 of its potential returns per unit of risk. Gold Royalty Corp is currently generating about -0.03 per unit of risk. If you would invest  1,345  in Triple Flag Precious on September 27, 2024 and sell it today you would earn a total of  176.00  from holding Triple Flag Precious or generate 13.09% return on investment over 90 days.

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

Triple Flag Precious  vs.  Gold Royalty Corp

Triple Flag Precious

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triple Flag Precious has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Gold Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic 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 Triple Flag and Gold Royalty

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

The idea behind Triple Flag Precious and Gold 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.