Correlation Between Franco Nevada and Galiano Gold
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Galiano 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 Galiano 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 Galiano Gold, you can compare the effects of market volatilities on Franco Nevada and Galiano 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 Galiano Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Galiano Gold.
Diversification Opportunities for Franco Nevada and Galiano Gold
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Franco and Galiano is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Galiano Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galiano Gold 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 Galiano Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galiano Gold has no effect on the direction of Franco Nevada i.e., Franco Nevada and Galiano Gold go up and down completely randomly.
Pair Corralation between Franco Nevada and Galiano Gold
Considering the 90-day investment horizon Franco Nevada is expected to under-perform the Galiano Gold. But the stock apears to be less risky and, when comparing its historical volatility, Franco Nevada is 2.17 times less risky than Galiano Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Galiano Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Galiano Gold on August 31, 2024 and sell it today you would earn a total of 83.00 from holding Galiano Gold or generate 143.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Galiano Gold
Performance |
| Timeline |
| Franco Nevada |
| Galiano Gold |
Franco Nevada and Galiano Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Galiano Gold
The main advantage of trading using opposite Franco Nevada and Galiano Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Galiano 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 Galiano Gold will offset losses from the drop in Galiano Gold'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 |
| Galiano Gold vs. Avino Silver Gold | Galiano Gold vs. Americas Silver Corp | Galiano Gold vs. Paramount Gold Nevada | Galiano Gold vs. Fury Gold 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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