Correlation Between Precious Metals and Diversified Royalty

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

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

Diversification Opportunities for Precious Metals and Diversified Royalty

0.67

Correlation Coefficient

Precious Metals  Diversified Royalty

Poor diversification

The 3 months correlation between Precious and Diversified is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Diversified Royalty Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Royalty Corp and Precious Metals 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 Precious Metals And are associated (or correlated) with Diversified Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Royalty Corp has no effect on the direction of Precious Metals i.e., Precious Metals and Diversified Royalty go up and down completely randomly.

Pair Corralation between Precious Metals and Diversified Royalty

Assuming the 90 days trading horizon Precious Metals is expected to generate 1.87 times less return on investment than Diversified Royalty. In addition to that, Precious Metals is 1.31 times more volatile than Diversified Royalty Corp. It trades about 0.09 of its total potential returns per unit of risk. Diversified Royalty Corp is currently generating about 0.23 per unit of volatility. If you would invest  274.00  in Diversified Royalty Corp on April 20, 2025 and sell it today you would earn a total of  54.00  from holding Diversified Royalty Corp or generate 19.71% return on investment over 90 days.

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

Precious Metals And  vs.  Diversified Royalty Corp

Precious Metals And

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals And are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Precious Metals may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Diversified Royalty Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Royalty Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Diversified Royalty displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Precious Metals and Diversified Royalty

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

The idea behind Precious Metals And and Diversified 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.