Correlation Between Barrick Gold and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Barrick Gold and Franco Nevada 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 Barrick Gold and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barrick Gold and Franco Nevada, you can compare the effects of market volatilities on Barrick Gold and Franco Nevada 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 Barrick Gold with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barrick Gold and Franco Nevada.
Diversification Opportunities for Barrick Gold and Franco Nevada
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barrick and Franco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Barrick Gold and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Barrick Gold 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 Barrick Gold are associated (or correlated) with Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of Barrick Gold i.e., Barrick Gold and Franco Nevada go up and down completely randomly.
Pair Corralation between Barrick Gold and Franco Nevada
Assuming the 90 days horizon Barrick Gold is expected to under-perform the Franco Nevada. But the stock apears to be less risky and, when comparing its historical volatility, Barrick Gold is 1.03 times less risky than Franco Nevada. The stock trades about -0.23 of its potential returns per unit of risk. The Franco Nevada is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 12,730 in Franco Nevada on August 31, 2024 and sell it today you would lose (990.00) from holding Franco Nevada or give up 7.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barrick Gold vs. Franco Nevada
Performance |
| Timeline |
| Barrick Gold |
| Franco Nevada |
Barrick Gold and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barrick Gold and Franco Nevada
The main advantage of trading using opposite Barrick Gold and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barrick Gold position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.| Barrick Gold vs. Kaiser Aluminum | Barrick Gold vs. AGRICULTBK HADR25 YC | Barrick Gold vs. PARKEN Sport Entertainment | Barrick Gold vs. DAIRY FARM INTL |
| Franco Nevada vs. ZIJIN MINH UNSPADR20 | Franco Nevada vs. Superior Plus Corp | Franco Nevada vs. NMI Holdings | Franco Nevada vs. Origin Agritech |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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