Correlation Between Franco Nevada and Aya Gold

Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Aya 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 Aya 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 Aya Gold Silver, you can compare the effects of market volatilities on Franco Nevada and Aya 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 Aya Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Aya Gold.

Diversification Opportunities for Franco Nevada and Aya Gold

0.48

Correlation Coefficient

Franco Nevada  Aya Gold

Very weak diversification

The 3 months correlation between Franco and Aya is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Aya Gold Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aya Gold Silver 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 Aya Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aya Gold Silver has no effect on the direction of Franco Nevada i.e., Franco Nevada and Aya Gold go up and down completely randomly.

Pair Corralation between Franco Nevada and Aya Gold

Assuming the 90 days trading horizon Franco Nevada is expected to generate 1.32 times less return on investment than Aya Gold. But when comparing it to its historical volatility, Franco Nevada is 1.75 times less risky than Aya Gold. It trades about 0.29 of its potential returns per unit of risk. Aya Gold Silver is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,084  in Aya Gold Silver on October 21, 2024 and sell it today you would earn a total of  126.00  from holding Aya Gold Silver or generate 11.62% return on investment over 90 days.

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

Franco Nevada  vs.  Aya Gold Silver

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. In spite of very healthy basic indicators, Franco Nevada is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Aya Gold Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aya Gold Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Franco Nevada and Aya Gold

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

The idea behind Franco Nevada and Aya Gold Silver 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..