Correlation Between Franco Nevada and Wheaton Precious
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Wheaton Precious 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 Wheaton Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Wheaton Precious Metals, you can compare the effects of market volatilities on Franco Nevada and Wheaton Precious 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 Wheaton Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Wheaton Precious.
Diversification Opportunities for Franco Nevada and Wheaton Precious
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Franco and Wheaton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Franco Nevada i.e., Franco Nevada and Wheaton Precious go up and down completely randomly.
Pair Corralation between Franco Nevada and Wheaton Precious
Assuming the 90 days trading horizon Franco Nevada is expected to under-perform the Wheaton Precious. But the stock apears to be less risky and, when comparing its historical volatility, Franco Nevada is 1.11 times less risky than Wheaton Precious. The stock trades about -0.24 of its potential returns per unit of risk. The Wheaton Precious Metals is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 9,230 in Wheaton Precious Metals on August 28, 2024 and sell it today you would lose (720.00) from holding Wheaton Precious Metals or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Wheaton Precious Metals
Performance |
| Timeline |
| Franco Nevada |
| Wheaton Precious Metals |
Franco Nevada and Wheaton Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Wheaton Precious
The main advantage of trading using opposite Franco Nevada and Wheaton Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Wheaton Precious 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 Wheaton Precious will offset losses from the drop in Wheaton Precious' long position.| Franco Nevada vs. Wheaton Precious Metals | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Alamos Gold | Franco Nevada vs. Osisko Gold Ro |
| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Pan American Silver | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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