Correlation Between Franco Nevada and Sibanye Stillwater
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Sibanye Stillwater 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 Franco Nevada and Sibanye Stillwater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Sibanye Stillwater Limited, you can compare the effects of market volatilities on Franco Nevada and Sibanye Stillwater 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 Franco Nevada with a short position of Sibanye Stillwater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Sibanye Stillwater.
Diversification Opportunities for Franco Nevada and Sibanye Stillwater
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franco and Sibanye is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Sibanye Stillwater Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Stillwater and Franco Nevada 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 Franco Nevada are associated (or correlated) with Sibanye Stillwater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Stillwater has no effect on the direction of Franco Nevada i.e., Franco Nevada and Sibanye Stillwater go up and down completely randomly.
Pair Corralation between Franco Nevada and Sibanye Stillwater
Assuming the 90 days horizon Franco Nevada is expected to generate 0.51 times more return on investment than Sibanye Stillwater. However, Franco Nevada is 1.97 times less risky than Sibanye Stillwater. It trades about -0.16 of its potential returns per unit of risk. Sibanye Stillwater Limited is currently generating about -0.13 per unit of risk. If you would invest 12,480 in Franco Nevada on September 1, 2024 and sell it today you would lose (880.00) from holding Franco Nevada or give up 7.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Sibanye Stillwater Limited
Performance |
| Timeline |
| Franco Nevada |
| Sibanye Stillwater |
Franco Nevada and Sibanye Stillwater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Sibanye Stillwater
The main advantage of trading using opposite Franco Nevada and Sibanye Stillwater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Sibanye Stillwater 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 Sibanye Stillwater will offset losses from the drop in Sibanye Stillwater's long position.| Franco Nevada vs. NURAN WIRELESS INC | Franco Nevada vs. MTI WIRELESS EDGE | Franco Nevada vs. GungHo Online Entertainment | Franco Nevada vs. SALESFORCE INC CDR |
| Sibanye Stillwater vs. Playtech plc | Sibanye Stillwater vs. UNITED UTILITIES GR | Sibanye Stillwater vs. Major Drilling Group | Sibanye Stillwater vs. Algonquin Power Utilities |
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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