Correlation Between B2Gold Corp and Royal Gold

Can any of the company-specific risk be diversified away by investing in both B2Gold Corp 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 B2Gold Corp and Royal Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between B2Gold Corp and Royal Gold, you can compare the effects of market volatilities on B2Gold Corp 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 B2Gold Corp with a short position of Royal Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and Royal Gold.

Diversification Opportunities for B2Gold Corp and Royal Gold

0.58

Correlation Coefficient

B2Gold Corp  Royal Gold

Very weak diversification

The 3 months correlation between B2Gold and Royal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold Corp and Royal Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Gold and B2Gold Corp 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 B2Gold Corp 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 B2Gold Corp i.e., B2Gold Corp and Royal Gold go up and down completely randomly.

Pair Corralation between B2Gold Corp and Royal Gold

Considering the 90-day investment horizon B2Gold Corp is expected to generate 1.79 times more return on investment than Royal Gold. However, B2Gold Corp is 1.79 times more volatile than Royal Gold. It trades about 0.06 of its potential returns per unit of risk. Royal Gold is currently generating about 0.09 per unit of risk. If you would invest  264.00  in B2Gold Corp on September 3, 2024 and sell it today you would earn a total of  24.00  from holding B2Gold Corp or generate 9.09% return on investment over 90 days.

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

B2Gold Corp  vs.  Royal Gold

B2Gold Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in B2Gold Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, B2Gold Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Royal Gold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Royal Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with B2Gold Corp and Royal Gold

The main advantage of trading using opposite B2Gold Corp and Royal Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold Corp 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 B2Gold Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.