Correlation Between Franco Nevada and Osisko Gold
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Osisko 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 Osisko 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 Osisko Gold Ro, you can compare the effects of market volatilities on Franco Nevada and Osisko 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 Osisko Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Osisko Gold.
Diversification Opportunities for Franco Nevada and Osisko Gold
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Franco and Osisko is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Osisko Gold Ro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osisko Gold Ro 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 Osisko Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osisko Gold Ro has no effect on the direction of Franco Nevada i.e., Franco Nevada and Osisko Gold go up and down completely randomly.
Pair Corralation between Franco Nevada and Osisko Gold
Considering the 90-day investment horizon Franco Nevada is expected to under-perform the Osisko Gold. But the stock apears to be less risky and, when comparing its historical volatility, Franco Nevada is 1.06 times less risky than Osisko Gold. The stock trades about -0.26 of its potential returns per unit of risk. The Osisko Gold Ro is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 2,078 in Osisko Gold Ro on August 28, 2024 and sell it today you would lose (148.00) from holding Osisko Gold Ro or give up 7.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franco Nevada vs. Osisko Gold Ro
Performance |
| Timeline |
| Franco Nevada |
| Osisko Gold Ro |
Franco Nevada and Osisko Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Osisko Gold
The main advantage of trading using opposite Franco Nevada and Osisko Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Osisko 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 Osisko Gold will offset losses from the drop in Osisko Gold's long position.The idea behind Franco Nevada and Osisko Gold Ro pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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