Correlation Between Royal Canadian and GoldMoney

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

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

Diversification Opportunities for Royal Canadian and GoldMoney

0.83

Correlation Coefficient

Royal Canadian  GoldMoney

Very poor diversification

The 3 months correlation between Royal and GoldMoney is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Royal Canadian Mint and GoldMoney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMoney and Royal Canadian 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 Canadian Mint are associated (or correlated) with GoldMoney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMoney has no effect on the direction of Royal Canadian i.e., Royal Canadian and GoldMoney go up and down completely randomly.

Pair Corralation between Royal Canadian and GoldMoney

Assuming the 90 days trading horizon Royal Canadian is expected to generate 2.32 times less return on investment than GoldMoney. But when comparing it to its historical volatility, Royal Canadian Mint is 2.25 times less risky than GoldMoney. It trades about 0.23 of its potential returns per unit of risk. GoldMoney is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  918.00  in GoldMoney on June 30, 2024 and sell it today you would earn a total of  88.00  from holding GoldMoney or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Royal Canadian Mint  vs.  GoldMoney

Royal Canadian Mint

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Canadian Mint are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Royal Canadian may actually be approaching a critical reversion point that can send shares even higher in October 2024.

GoldMoney

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GoldMoney are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GoldMoney displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royal Canadian and GoldMoney

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

The idea behind Royal Canadian Mint and GoldMoney 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.