Correlation Between Chalice Mining and Franco Nevada

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

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

Diversification Opportunities for Chalice Mining and Franco Nevada

0.57

Correlation Coefficient

Chalice Mining  Franco Nevada

Very weak diversification

The 3 months correlation between Chalice and Franco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chalice Mining Limited and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada and Chalice Mining 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 Chalice Mining Limited 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 Chalice Mining i.e., Chalice Mining and Franco Nevada go up and down completely randomly.

Pair Corralation between Chalice Mining and Franco Nevada

Assuming the 90 days horizon Chalice Mining is expected to generate 1.11 times less return on investment than Franco Nevada. In addition to that, Chalice Mining is 3.23 times more volatile than Franco Nevada. It trades about 0.07 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  11,375  in Franco Nevada on December 27, 2024 and sell it today you would earn a total of  3,085  from holding Franco Nevada or generate 27.12% return on investment over 90 days.

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

Chalice Mining Limited  vs.  Franco Nevada

Chalice Mining

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chalice Mining Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chalice Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Franco Nevada

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franco Nevada are ranked lower than 19 (%) 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 Chalice Mining and Franco Nevada

The main advantage of trading using opposite Chalice Mining and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chalice Mining 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 Chalice Mining Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.