Correlation Between EMX Royalty and Aston Minerals

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

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

Diversification Opportunities for EMX Royalty and Aston Minerals

0.17

Correlation Coefficient

EMX Royalty  Aston Minerals

Average diversification

The 3 months correlation between EMX and Aston is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Aston Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Minerals and EMX Royalty 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 EMX Royalty Corp are associated (or correlated) with Aston Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Minerals has no effect on the direction of EMX Royalty i.e., EMX Royalty and Aston Minerals go up and down completely randomly.

Pair Corralation between EMX Royalty and Aston Minerals

Considering the 90-day investment horizon EMX Royalty Corp is expected to under-perform the Aston Minerals. But the stock apears to be less risky and, when comparing its historical volatility, EMX Royalty Corp is 6.4 times less risky than Aston Minerals. The stock trades about -0.02 of its potential returns per unit of risk. The Aston Minerals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Aston Minerals on September 13, 2024 and sell it today you would earn a total of  0.25  from holding Aston Minerals or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

EMX Royalty Corp  vs.  Aston Minerals

EMX Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMX Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, EMX Royalty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aston Minerals

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with EMX Royalty and Aston Minerals

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

The idea behind EMX Royalty Corp and Aston Minerals 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.