Correlation Between US Gold and Orogen Royalties

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

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

Diversification Opportunities for US Gold and Orogen Royalties

-0.62

Correlation Coefficient

US Gold  Orogen Royalties

Excellent diversification

The 3 months correlation between USAU and Orogen is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding US Gold Corp and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties and US Gold 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 US Gold Corp are associated (or correlated) with Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of US Gold i.e., US Gold and Orogen Royalties go up and down completely randomly.

Pair Corralation between US Gold and Orogen Royalties

Given the investment horizon of 90 days US Gold Corp is expected to generate 1.55 times more return on investment than Orogen Royalties. However, US Gold is 1.55 times more volatile than Orogen Royalties. It trades about 0.12 of its potential returns per unit of risk. Orogen Royalties is currently generating about -0.04 per unit of risk. If you would invest  624.00  in US Gold Corp on September 15, 2024 and sell it today you would earn a total of  73.00  from holding US Gold Corp or generate 11.7% return on investment over 90 days.

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

US Gold Corp  vs.  Orogen Royalties

US Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, US Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Orogen Royalties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orogen Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with US Gold and Orogen Royalties

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

The idea behind US Gold Corp and Orogen Royalties 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.