Correlation Between Franco Nevada and Endeavour Mining

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

Diversification Opportunities for Franco Nevada and Endeavour Mining

0.49

Correlation Coefficient

Franco Nevada  Endeavour Mining

Very weak diversification

The 3 months correlation between Franco and Endeavour is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour 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 Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Franco Nevada i.e., Franco Nevada and Endeavour Mining go up and down completely randomly.

Pair Corralation between Franco Nevada and Endeavour Mining

Assuming the 90 days trading horizon Franco Nevada is expected to generate 0.71 times more return on investment than Endeavour Mining. However, Franco Nevada is 1.42 times less risky than Endeavour Mining. It trades about 0.03 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about -0.14 per unit of risk. If you would invest  16,748  in Franco Nevada on September 30, 2024 and sell it today you would earn a total of  357.00  from holding Franco Nevada or generate 2.13% 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.  Endeavour Mining Corp

Franco Nevada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franco Nevada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Franco Nevada is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Franco Nevada and Endeavour Mining

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

The idea behind Franco Nevada and Endeavour 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.