Correlation Between VanEck Gold and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both VanEck Gold and Franco Nevada 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 VanEck Gold and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Gold Miners and Franco Nevada, you can compare the effects of market volatilities on VanEck Gold and Franco Nevada 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 VanEck Gold with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Gold and Franco Nevada.
Diversification Opportunities for VanEck Gold and Franco Nevada
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VanEck and Franco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Gold Miners and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and VanEck Gold 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 VanEck Gold Miners are associated (or correlated) with Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of VanEck Gold i.e., VanEck Gold and Franco Nevada go up and down completely randomly.
Pair Corralation between VanEck Gold and Franco Nevada
Considering the 90-day investment horizon VanEck Gold Miners is expected to generate 1.15 times more return on investment than Franco Nevada. However, VanEck Gold is 1.15 times more volatile than Franco Nevada. It trades about 0.04 of its potential returns per unit of risk. Franco Nevada is currently generating about -0.01 per unit of risk. If you would invest 2,845 in VanEck Gold Miners on August 28, 2024 and sell it today you would earn a total of 869.00 from holding VanEck Gold Miners or generate 30.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Gold Miners vs. Franco Nevada
Performance |
| Timeline |
| VanEck Gold Miners |
| Franco Nevada |
VanEck Gold and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Gold and Franco Nevada
The main advantage of trading using opposite VanEck Gold and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Gold position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.| VanEck Gold vs. VanEck Junior Gold | VanEck Gold vs. iShares Silver Trust | VanEck Gold vs. SPDR Gold Shares | VanEck Gold vs. Newmont Goldcorp Corp |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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