Correlation Between New Found and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both New Found 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 New Found and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Found Gold and Franco Nevada, you can compare the effects of market volatilities on New Found 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 New Found with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Found and Franco Nevada.
Diversification Opportunities for New Found and Franco Nevada
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Franco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding New Found Gold and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and New Found 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 New Found Gold 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 New Found i.e., New Found and Franco Nevada go up and down completely randomly.
Pair Corralation between New Found and Franco Nevada
Given the investment horizon of 90 days New Found Gold is expected to under-perform the Franco Nevada. In addition to that, New Found is 1.91 times more volatile than Franco Nevada. It trades about -0.03 of its total potential returns per unit of risk. Franco Nevada is currently generating about 0.0 per unit of volatility. If you would invest 13,160 in Franco Nevada on September 12, 2024 and sell it today you would lose (970.00) from holding Franco Nevada or give up 7.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Found Gold vs. Franco Nevada
Performance |
| Timeline |
| New Found Gold |
| Franco Nevada |
New Found and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Found and Franco Nevada
The main advantage of trading using opposite New Found and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Found 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.| New Found vs. Franco Nevada | New Found vs. Royal Gold | New Found vs. Alamos Gold | New Found vs. Seabridge Gold |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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