Correlation Between BHP Group and EMX Royalty
Can any of the company-specific risk be diversified away by investing in both BHP Group 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 BHP Group and EMX Royalty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and EMX Royalty Corp, you can compare the effects of market volatilities on BHP Group 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 BHP Group with a short position of EMX Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and EMX Royalty.
Diversification Opportunities for BHP Group and EMX Royalty
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BHP and EMX is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited 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 BHP Group 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 BHP Group Limited 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 BHP Group i.e., BHP Group and EMX Royalty go up and down completely randomly.
Pair Corralation between BHP Group and EMX Royalty
Considering the 90-day investment horizon BHP Group is expected to generate 7.57 times less return on investment than EMX Royalty. But when comparing it to its historical volatility, BHP Group Limited is 1.55 times less risky than EMX Royalty. It trades about 0.08 of its potential returns per unit of risk. EMX Royalty Corp is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 241.00 in EMX Royalty Corp on June 11, 2025 and sell it today you would earn a total of 188.00 from holding EMX Royalty Corp or generate 78.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. EMX Royalty Corp
Performance |
| Timeline |
| BHP Group Limited |
| EMX Royalty Corp |
BHP Group and EMX Royalty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and EMX Royalty
The main advantage of trading using opposite BHP Group and EMX Royalty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group 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.| BHP Group vs. Vale SA ADR | BHP Group vs. Teck Resources Ltd | BHP Group vs. Lithium Americas Corp | BHP Group vs. MP Materials Corp |
| EMX Royalty vs. Lithium Americas Corp | EMX Royalty vs. Standard Lithium | EMX Royalty vs. NioCorp Developments Ltd | EMX Royalty vs. Teck Resources Ltd |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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