Correlation Between Franco Nevada and Goldbank Mining

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

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

Diversification Opportunities for Franco Nevada and Goldbank Mining

-0.35

Correlation Coefficient

Franco Nevada  Goldbank Mining

Very good diversification

The 3 months correlation between Franco and Goldbank is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Goldbank Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldbank Mining Corp 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 Goldbank Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldbank Mining Corp has no effect on the direction of Franco Nevada i.e., Franco Nevada and Goldbank Mining go up and down completely randomly.

Pair Corralation between Franco Nevada and Goldbank Mining

Assuming the 90 days trading horizon Franco Nevada is expected to generate 124.16 times less return on investment than Goldbank Mining. But when comparing it to its historical volatility, Franco Nevada is 5.53 times less risky than Goldbank Mining. It trades about 0.0 of its potential returns per unit of risk. Goldbank Mining Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Goldbank Mining Corp on October 21, 2024 and sell it today you would earn a total of  11.00  from holding Goldbank Mining Corp or generate 157.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Franco Nevada  vs.  Goldbank Mining Corp

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.

Goldbank Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goldbank Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Goldbank Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Franco Nevada and Goldbank Mining

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

The idea behind Franco Nevada and Goldbank Mining Corp 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.