Correlation Between Franco Nevada and Vanguard Funds

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

By analyzing existing cross correlation between Franco Nevada and Vanguard Funds Public, you can compare the effects of market volatilities on Franco Nevada and Vanguard Funds 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 Vanguard Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Vanguard Funds.

Diversification Opportunities for Franco Nevada and Vanguard Funds

-0.47

Correlation Coefficient

Franco Nevada  Vanguard Funds

Very good diversification

The 3 months correlation between Franco and Vanguard is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Vanguard Funds Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Funds Public 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 Vanguard Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Funds Public has no effect on the direction of Franco Nevada i.e., Franco Nevada and Vanguard Funds go up and down completely randomly.

Pair Corralation between Franco Nevada and Vanguard Funds

Assuming the 90 days horizon Franco Nevada is expected to generate 1.66 times more return on investment than Vanguard Funds. However, Franco Nevada is 1.66 times more volatile than Vanguard Funds Public. It trades about 0.24 of its potential returns per unit of risk. Vanguard Funds Public is currently generating about -0.1 per unit of risk. If you would invest  11,321  in Franco Nevada on December 29, 2024 and sell it today you would earn a total of  3,024  from holding Franco Nevada or generate 26.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Franco Nevada  vs.  Vanguard Funds Public

Franco Nevada

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franco Nevada are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Franco Nevada reported solid returns over the last few months and may actually be approaching a breakup point.

Vanguard Funds Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Funds Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Franco Nevada and Vanguard Funds

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

The idea behind Franco Nevada and Vanguard Funds Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.