Correlation Between Franco Nevada and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Harmony Gold Mining, you can compare the effects of market volatilities on Franco Nevada and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Harmony Gold.
Diversification Opportunities for Franco Nevada and Harmony Gold
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franco and Harmony is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Franco Nevada i.e., Franco Nevada and Harmony Gold go up and down completely randomly.
Pair Corralation between Franco Nevada and Harmony Gold
Assuming the 90 days horizon Franco Nevada is expected to generate 0.6 times more return on investment than Harmony Gold. However, Franco Nevada is 1.66 times less risky than Harmony Gold. It trades about -0.15 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.11 per unit of risk. If you would invest 12,625 in Franco Nevada on August 28, 2024 and sell it today you would lose (775.00) from holding Franco Nevada or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Harmony Gold Mining
Performance |
| Timeline |
| Franco Nevada |
| Harmony Gold Mining |
Franco Nevada and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Harmony Gold
The main advantage of trading using opposite Franco Nevada and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Superior Plus Corp | Franco Nevada vs. NMI Holdings | Franco Nevada vs. Origin Agritech |
| Harmony Gold vs. Franco Nevada | Harmony Gold vs. Agnico Eagle Mines | Harmony Gold vs. Superior Plus Corp | Harmony Gold vs. NMI Holdings |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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