Correlation Between Franco Nevada and Methanex
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Methanex 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 Methanex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Methanex, you can compare the effects of market volatilities on Franco Nevada and Methanex 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 Methanex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Methanex.
Diversification Opportunities for Franco Nevada and Methanex
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Franco and Methanex is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Methanex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanex 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 Methanex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanex has no effect on the direction of Franco Nevada i.e., Franco Nevada and Methanex go up and down completely randomly.
Pair Corralation between Franco Nevada and Methanex
Considering the 90-day investment horizon Franco Nevada is expected to generate 1.03 times less return on investment than Methanex. But when comparing it to its historical volatility, Franco Nevada is 1.27 times less risky than Methanex. It trades about 0.03 of its potential returns per unit of risk. Methanex is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,196 in Methanex on August 26, 2024 and sell it today you would earn a total of 406.00 from holding Methanex or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Methanex
Performance |
| Timeline |
| Franco Nevada |
| Methanex |
Franco Nevada and Methanex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Methanex
The main advantage of trading using opposite Franco Nevada and Methanex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Methanex 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 Methanex will offset losses from the drop in Methanex'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 |
| Methanex vs. AdvanSix | Methanex vs. Lsb Industries | Methanex vs. Green Plains Renewable | Methanex vs. Tronox Holdings PLC |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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