Correlation Between Gold Royalty and Triple Flag

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

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

Diversification Opportunities for Gold Royalty and Triple Flag

0.79

Correlation Coefficient

Gold Royalty  Triple Flag

Poor diversification

The 3 months correlation between Gold and Triple is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Triple Flag Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triple Flag Precious and Gold 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 Gold Royalty Corp are associated (or correlated) with Triple Flag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triple Flag Precious has no effect on the direction of Gold Royalty i.e., Gold Royalty and Triple Flag go up and down completely randomly.

Pair Corralation between Gold Royalty and Triple Flag

Given the investment horizon of 90 days Gold Royalty is expected to generate 1.59 times less return on investment than Triple Flag. In addition to that, Gold Royalty is 1.49 times more volatile than Triple Flag Precious. It trades about 0.02 of its total potential returns per unit of risk. Triple Flag Precious is currently generating about 0.05 per unit of volatility. If you would invest  1,587  in Triple Flag Precious on September 2, 2024 and sell it today you would earn a total of  86.00  from holding Triple Flag Precious or generate 5.42% return on investment over 90 days.

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

Gold Royalty Corp  vs.  Triple Flag Precious

Gold Royalty Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gold Royalty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Triple Flag Precious

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triple Flag Precious are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Triple Flag is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gold Royalty and Triple Flag

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

The idea behind Gold Royalty Corp and Triple Flag Precious 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.