Correlation Between Franco Nevada and ODYSSEY GOLD

Can any of the company-specific risk be diversified away by investing in both Franco Nevada and ODYSSEY GOLD 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 Franco Nevada and ODYSSEY GOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Franco Nevada and ODYSSEY GOLD LTD, you can compare the effects of market volatilities on Franco Nevada and ODYSSEY GOLD 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 Franco Nevada with a short position of ODYSSEY GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and ODYSSEY GOLD.

Diversification Opportunities for Franco Nevada and ODYSSEY GOLD

0.07

Correlation Coefficient

Franco Nevada  ODYSSEY GOLD

Significant diversification

The 3 months correlation between Franco and ODYSSEY is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and ODYSSEY GOLD LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODYSSEY GOLD LTD and Franco Nevada 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 Franco Nevada are associated (or correlated) with ODYSSEY GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODYSSEY GOLD LTD has no effect on the direction of Franco Nevada i.e., Franco Nevada and ODYSSEY GOLD go up and down completely randomly.

Pair Corralation between Franco Nevada and ODYSSEY GOLD

Assuming the 90 days horizon Franco Nevada is expected to generate 0.12 times more return on investment than ODYSSEY GOLD. However, Franco Nevada is 8.3 times less risky than ODYSSEY GOLD. It trades about -0.14 of its potential returns per unit of risk. ODYSSEY GOLD LTD is currently generating about -0.03 per unit of risk. If you would invest  11,569  in Franco Nevada on September 24, 2024 and sell it today you would lose (454.00) from holding Franco Nevada or give up 3.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Franco Nevada  vs.  ODYSSEY GOLD LTD

Franco Nevada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franco Nevada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Franco Nevada is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ODYSSEY GOLD LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ODYSSEY GOLD LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Franco Nevada and ODYSSEY GOLD

The main advantage of trading using opposite Franco Nevada and ODYSSEY GOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, ODYSSEY GOLD 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 ODYSSEY GOLD will offset losses from the drop in ODYSSEY GOLD's long position.

The idea behind Franco Nevada and ODYSSEY GOLD LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Directory module to find actively traded commodities issued by global exchanges.