Correlation Between Newmont and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Newmont 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 Newmont and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont and Franco Nevada, you can compare the effects of market volatilities on Newmont 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 Newmont with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and Franco Nevada.
Diversification Opportunities for Newmont and Franco Nevada
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newmont and Franco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Newmont 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 Newmont 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 Newmont i.e., Newmont and Franco Nevada go up and down completely randomly.
Pair Corralation between Newmont and Franco Nevada
Assuming the 90 days horizon Newmont is expected to under-perform the Franco Nevada. In addition to that, Newmont is 1.43 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 0.1 per unit of volatility. If you would invest 10,806 in Franco Nevada on November 2, 2024 and sell it today you would earn a total of 1,834 from holding Franco Nevada or generate 16.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newmont vs. Franco Nevada
Performance |
| Timeline |
| Newmont |
| Franco Nevada |
Newmont and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont and Franco Nevada
The main advantage of trading using opposite Newmont and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont 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.| Newmont vs. Aya Gold Silver | Newmont vs. Verizon Communications | Newmont vs. GEELY AUTOMOBILE | Newmont vs. GALENA MINING LTD |
| Franco Nevada vs. Gladstone Investment | Franco Nevada vs. ANGANG STEEL H | Franco Nevada vs. Virtus Investment Partners | Franco Nevada vs. Tianjin Capital Environmental |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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