Correlation Between Northern Minerals and Gold Royalty

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

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

Diversification Opportunities for Northern Minerals and Gold Royalty

-0.38

Correlation Coefficient

Northern Minerals  Gold Royalty

Very good diversification

The 3 months correlation between Northern and Gold is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Northern Minerals Exploration 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 Northern Minerals 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 Northern Minerals Exploration 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 Northern Minerals i.e., Northern Minerals and Gold Royalty go up and down completely randomly.

Pair Corralation between Northern Minerals and Gold Royalty

Given the investment horizon of 90 days Northern Minerals Exploration is expected to generate 10.09 times more return on investment than Gold Royalty. However, Northern Minerals is 10.09 times more volatile than Gold Royalty Corp. It trades about 0.12 of its potential returns per unit of risk. Gold Royalty Corp is currently generating about 0.02 per unit of risk. If you would invest  18.00  in Northern Minerals Exploration on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Northern Minerals Exploration or generate 0.0% return on investment over 90 days.

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

Northern Minerals Exploration  vs.  Gold Royalty Corp

Northern Minerals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Minerals Exploration are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Northern Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Northern Minerals and Gold Royalty

The main advantage of trading using opposite Northern Minerals and Gold Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Minerals 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 Northern Minerals Exploration 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.