Correlation Between Franco Nevada and Gold Road
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Gold Road 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 Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Gold Road Resources, you can compare the effects of market volatilities on Franco Nevada and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Gold Road.
Diversification Opportunities for Franco Nevada and Gold Road
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franco and Gold is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Franco Nevada i.e., Franco Nevada and Gold Road go up and down completely randomly.
Pair Corralation between Franco Nevada and Gold Road
Assuming the 90 days horizon Franco Nevada is expected to generate 1.91 times less return on investment than Gold Road. In addition to that, Franco Nevada is 1.5 times more volatile than Gold Road Resources. It trades about 0.33 of its total potential returns per unit of risk. Gold Road Resources is currently generating about 0.94 per unit of volatility. If you would invest 120.00 in Gold Road Resources on October 23, 2024 and sell it today you would earn a total of 22.00 from holding Gold Road Resources or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Gold Road Resources
Performance |
| Timeline |
| Franco Nevada |
| Gold Road Resources |
Franco Nevada and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Gold Road
The main advantage of trading using opposite Franco Nevada and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Franco Nevada vs. Brockhaus Capital Management | Franco Nevada vs. Lifeway Foods | Franco Nevada vs. CEOTRONICS | Franco Nevada vs. Waste Management |
| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Newmont | Gold Road vs. Franco Nevada | Gold Road vs. Agnico Eagle Mines |
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 Directory module to find actively traded commodities issued by global exchanges.
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