Correlation Between Wheaton Precious and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Franco Nevada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Franco Nevada, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Franco Nevada.
Diversification Opportunities for Wheaton Precious and Franco Nevada
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wheaton and Franco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Franco Nevada go up and down completely randomly.
Pair Corralation between Wheaton Precious and Franco Nevada
Assuming the 90 days horizon Wheaton Precious Metals is expected to generate 0.82 times more return on investment than Franco Nevada. However, Wheaton Precious Metals is 1.23 times less risky than Franco Nevada. It trades about 0.03 of its potential returns per unit of risk. Franco Nevada is currently generating about -0.15 per unit of risk. If you would invest 6,090 in Wheaton Precious Metals on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Wheaton Precious Metals or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Franco Nevada
Performance |
| Timeline |
| Wheaton Precious Metals |
| Franco Nevada |
Wheaton Precious and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Franco Nevada
The main advantage of trading using opposite Wheaton Precious and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Franco Nevada | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Superior Plus Corp | Wheaton Precious vs. NMI Holdings |
| Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Superior Plus Corp | Franco Nevada vs. NMI Holdings | Franco Nevada vs. Origin Agritech |
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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