Correlation Between Gold Resource and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Gold Resource 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 Gold Resource and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Resource and Franco Nevada, you can compare the effects of market volatilities on Gold Resource 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 Gold Resource with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Resource and Franco Nevada.
Diversification Opportunities for Gold Resource and Franco Nevada
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gold and Franco is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Gold Resource and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Gold Resource 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 Gold Resource 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 Gold Resource i.e., Gold Resource and Franco Nevada go up and down completely randomly.
Pair Corralation between Gold Resource and Franco Nevada
Given the investment horizon of 90 days Gold Resource is expected to generate 3.64 times more return on investment than Franco Nevada. However, Gold Resource is 3.64 times more volatile than Franco Nevada. It trades about 0.14 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.16 per unit of risk. If you would invest 15.00 in Gold Resource on September 12, 2024 and sell it today you would earn a total of 2.38 from holding Gold Resource or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Resource vs. Franco Nevada
Performance |
| Timeline |
| Gold Resource |
| Franco Nevada |
Gold Resource and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Resource and Franco Nevada
The main advantage of trading using opposite Gold Resource and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Resource 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.| Gold Resource vs. Franco Nevada | Gold Resource vs. Royal Gold | Gold Resource vs. Seabridge Gold | Gold Resource vs. Pan American Silver |
| Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold Ltd |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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