Correlation Between K92 Mining and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both K92 Mining 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 K92 Mining and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K92 Mining and Franco Nevada, you can compare the effects of market volatilities on K92 Mining 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 K92 Mining with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of K92 Mining and Franco Nevada.
Diversification Opportunities for K92 Mining and Franco Nevada
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between K92 and Franco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding K92 Mining and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and K92 Mining 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 K92 Mining 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 K92 Mining i.e., K92 Mining and Franco Nevada go up and down completely randomly.
Pair Corralation between K92 Mining and Franco Nevada
Assuming the 90 days horizon K92 Mining is expected to generate 1.85 times more return on investment than Franco Nevada. However, K92 Mining is 1.85 times more volatile than Franco Nevada. It trades about 0.03 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.02 per unit of risk. If you would invest 532.00 in K92 Mining on November 9, 2024 and sell it today you would earn a total of 178.00 from holding K92 Mining or generate 33.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K92 Mining vs. Franco Nevada
Performance |
| Timeline |
| K92 Mining |
| Franco Nevada |
K92 Mining and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K92 Mining and Franco Nevada
The main advantage of trading using opposite K92 Mining and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K92 Mining 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.| K92 Mining vs. I 80 Gold Corp | K92 Mining vs. Equinox Gold Corp | K92 Mining vs. Contango ORE | K92 Mining vs. Orla Mining |
| 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 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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