Correlation Between EMX Royalty and Vale SA
Can any of the company-specific risk be diversified away by investing in both EMX Royalty and Vale SA 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 EMX Royalty and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMX Royalty Corp and Vale SA ADR, you can compare the effects of market volatilities on EMX Royalty and Vale SA 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 EMX Royalty with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMX Royalty and Vale SA.
Diversification Opportunities for EMX Royalty and Vale SA
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EMX and Vale is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR and EMX 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 EMX Royalty Corp are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of EMX Royalty i.e., EMX Royalty and Vale SA go up and down completely randomly.
Pair Corralation between EMX Royalty and Vale SA
Considering the 90-day investment horizon EMX Royalty Corp is expected to generate 1.07 times more return on investment than Vale SA. However, EMX Royalty is 1.07 times more volatile than Vale SA ADR. It trades about 0.01 of its potential returns per unit of risk. Vale SA ADR is currently generating about 0.01 per unit of risk. If you would invest 186.00 in EMX Royalty Corp on February 5, 2024 and sell it today you would lose (1.00) from holding EMX Royalty Corp or give up 0.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
EMX Royalty Corp vs. Vale SA ADR
Performance |
Timeline |
EMX Royalty Corp |
Vale SA ADR |
EMX Royalty and Vale SA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EMX Royalty and Vale SA
The main advantage of trading using opposite EMX Royalty and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMX Royalty position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.EMX Royalty vs. Metalla Royalty Streaming | EMX Royalty vs. Osisko Gold Ro | EMX Royalty vs. Equinox Gold Corp | EMX Royalty vs. SilverCrest Metals |
Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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