Correlation Between Aston Minerals and EMX Royalty

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

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

Diversification Opportunities for Aston Minerals and EMX Royalty

0.17

Correlation Coefficient

Aston Minerals  EMX Royalty

Average diversification

The 3 months correlation between Aston and EMX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aston Minerals and EMX Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMX Royalty Corp and Aston 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 Aston Minerals are associated (or correlated) with EMX Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMX Royalty Corp has no effect on the direction of Aston Minerals i.e., Aston Minerals and EMX Royalty go up and down completely randomly.

Pair Corralation between Aston Minerals and EMX Royalty

Assuming the 90 days horizon Aston Minerals is expected to generate 6.4 times more return on investment than EMX Royalty. However, Aston Minerals is 6.4 times more volatile than EMX Royalty Corp. It trades about 0.09 of its potential returns per unit of risk. EMX Royalty Corp is currently generating about -0.02 per unit of risk. If you would invest  0.50  in Aston Minerals on September 13, 2024 and sell it today you would earn a total of  0.25  from holding Aston Minerals or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Aston Minerals  vs.  EMX Royalty Corp

Aston Minerals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aston Minerals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aston Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

EMX Royalty Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMX Royalty Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, EMX Royalty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aston Minerals and EMX Royalty

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

The idea behind Aston Minerals and EMX 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.