Correlation Between Royal Road and White Gold

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

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

Diversification Opportunities for Royal Road and White Gold

0.54

Correlation Coefficient

Royal Road  White Gold

Very weak diversification

The 3 months correlation between Royal and White is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Royal Road Minerals and White Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Gold Corp and Royal Road 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 Royal Road Minerals are associated (or correlated) with White Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Gold Corp has no effect on the direction of Royal Road i.e., Royal Road and White Gold go up and down completely randomly.

Pair Corralation between Royal Road and White Gold

Assuming the 90 days horizon Royal Road Minerals is expected to under-perform the White Gold. But the stock apears to be less risky and, when comparing its historical volatility, Royal Road Minerals is 1.2 times less risky than White Gold. The stock trades about -0.11 of its potential returns per unit of risk. The White Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  20.00  in White Gold Corp on September 27, 2024 and sell it today you would earn a total of  1.00  from holding White Gold Corp or generate 5.0% return on investment over 90 days.

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

Royal Road Minerals  vs.  White Gold Corp

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.

White Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days White Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Royal Road and White Gold

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

The idea behind Royal Road Minerals and White Gold 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.