Correlation Between Franco Nevada and B2Gold Corp
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and B2Gold Corp 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 B2Gold Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and B2Gold Corp, you can compare the effects of market volatilities on Franco Nevada and B2Gold Corp 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 B2Gold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and B2Gold Corp.
Diversification Opportunities for Franco Nevada and B2Gold Corp
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franco and B2Gold is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and B2Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B2Gold Corp 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 B2Gold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B2Gold Corp has no effect on the direction of Franco Nevada i.e., Franco Nevada and B2Gold Corp go up and down completely randomly.
Pair Corralation between Franco Nevada and B2Gold Corp
Considering the 90-day investment horizon Franco Nevada is expected to generate 0.66 times more return on investment than B2Gold Corp. However, Franco Nevada is 1.51 times less risky than B2Gold Corp. It trades about 0.42 of its potential returns per unit of risk. B2Gold Corp is currently generating about 0.04 per unit of risk. If you would invest 11,759 in Franco Nevada on November 1, 2024 and sell it today you would earn a total of 1,865 from holding Franco Nevada or generate 15.86% 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. B2Gold Corp
Performance |
| Timeline |
| Franco Nevada |
| B2Gold Corp |
Franco Nevada and B2Gold Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and B2Gold Corp
The main advantage of trading using opposite Franco Nevada and B2Gold Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, B2Gold Corp 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 B2Gold Corp will offset losses from the drop in B2Gold Corp's long position.| Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold Ltd |
| B2Gold Corp vs. Sandstorm Gold Ltd | B2Gold Corp vs. Kinross Gold | B2Gold Corp vs. Alamos Gold | B2Gold Corp vs. Fortuna Silver 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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