Correlation Between Goldbank Mining and Royal Road

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

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

Diversification Opportunities for Goldbank Mining and Royal Road

0.03

Correlation Coefficient

Goldbank Mining  Royal Road

Significant diversification

The 3 months correlation between Goldbank and Royal is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Goldbank Mining Corp and Royal Road Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Road Minerals and Goldbank 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 Goldbank Mining Corp are associated (or correlated) with Royal Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Road Minerals has no effect on the direction of Goldbank Mining i.e., Goldbank Mining and Royal Road go up and down completely randomly.

Pair Corralation between Goldbank Mining and Royal Road

Assuming the 90 days horizon Goldbank Mining Corp is expected to generate 2.38 times more return on investment than Royal Road. However, Goldbank Mining is 2.38 times more volatile than Royal Road Minerals. It trades about 0.06 of its potential returns per unit of risk. Royal Road Minerals is currently generating about -0.02 per unit of risk. If you would invest  18.00  in Goldbank Mining Corp on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Goldbank Mining Corp or generate 0.0% return on investment over 90 days.

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

Goldbank Mining Corp  vs.  Royal Road Minerals

Goldbank Mining Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldbank Mining Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goldbank Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Royal Road Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Road Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Goldbank Mining and Royal Road

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

The idea behind Goldbank Mining Corp and Royal Road 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.