Correlation Between Contango ORE and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Contango ORE 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 Contango ORE and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contango ORE and Franco Nevada, you can compare the effects of market volatilities on Contango ORE 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 Contango ORE with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contango ORE and Franco Nevada.
Diversification Opportunities for Contango ORE and Franco Nevada
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Contango and Franco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Contango ORE and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Contango ORE 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 Contango ORE 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 Contango ORE i.e., Contango ORE and Franco Nevada go up and down completely randomly.
Pair Corralation between Contango ORE and Franco Nevada
Given the investment horizon of 90 days Contango ORE is expected to under-perform the Franco Nevada. In addition to that, Contango ORE is 1.28 times more volatile than Franco Nevada. It trades about -0.34 of its total potential returns per unit of risk. Franco Nevada is currently generating about -0.21 per unit of volatility. If you would invest 13,598 in Franco Nevada on August 27, 2024 and sell it today you would lose (1,229) from holding Franco Nevada or give up 9.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contango ORE vs. Franco Nevada
Performance |
| Timeline |
| Contango ORE |
| Franco Nevada |
Contango ORE and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contango ORE and Franco Nevada
The main advantage of trading using opposite Contango ORE and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contango ORE 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.| Contango ORE vs. Labrador Gold Corp | Contango ORE vs. Aurion Resources | Contango ORE vs. Puma Exploration | Contango ORE vs. Golden Star Resource |
| Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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