Correlation Between Avanos Medical and Franco Nevada

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

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

Diversification Opportunities for Avanos Medical and Franco Nevada

-0.1

Correlation Coefficient

Avanos Medical  Franco Nevada

Good diversification

The 3 months correlation between Avanos and Franco is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Avanos Medical and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Avanos Medical 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 Avanos Medical 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 Avanos Medical i.e., Avanos Medical and Franco Nevada go up and down completely randomly.

Pair Corralation between Avanos Medical and Franco Nevada

Assuming the 90 days trading horizon Avanos Medical is expected to under-perform the Franco Nevada. In addition to that, Avanos Medical is 1.16 times more volatile than Franco Nevada. It trades about -0.1 of its total potential returns per unit of risk. Franco Nevada is currently generating about 0.24 per unit of volatility. If you would invest  11,106  in Franco Nevada on December 22, 2024 and sell it today you would earn a total of  2,944  from holding Franco Nevada or generate 26.51% return on investment over 90 days.

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

Avanos Medical  vs.  Franco Nevada

Avanos Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avanos Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 uncertain basic indicators, Franco Nevada reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avanos Medical and Franco Nevada

The main advantage of trading using opposite Avanos Medical and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanos Medical 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.

The idea behind Avanos Medical and Franco Nevada 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.