Correlation Between Triple Flag and Fresnillo PLC

Can any of the company-specific risk be diversified away by investing in both Triple Flag and Fresnillo PLC 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 Triple Flag and Fresnillo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Triple Flag Precious and Fresnillo PLC, you can compare the effects of market volatilities on Triple Flag and Fresnillo PLC 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 Triple Flag with a short position of Fresnillo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triple Flag and Fresnillo PLC.

Diversification Opportunities for Triple Flag and Fresnillo PLC

0.78

Correlation Coefficient

Triple Flag  Fresnillo PLC

Poor diversification

The 3 months correlation between Triple and Fresnillo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Triple Flag Precious and Fresnillo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo PLC and Triple Flag 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 Triple Flag Precious are associated (or correlated) with Fresnillo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo PLC has no effect on the direction of Triple Flag i.e., Triple Flag and Fresnillo PLC go up and down completely randomly.

Pair Corralation between Triple Flag and Fresnillo PLC

Given the investment horizon of 90 days Triple Flag is expected to generate 3.05 times less return on investment than Fresnillo PLC. But when comparing it to its historical volatility, Triple Flag Precious is 1.54 times less risky than Fresnillo PLC. It trades about 0.05 of its potential returns per unit of risk. Fresnillo PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  695.00  in Fresnillo PLC on September 2, 2024 and sell it today you would earn a total of  127.00  from holding Fresnillo PLC or generate 18.27% return on investment over 90 days.

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

Triple Flag Precious  vs.  Fresnillo PLC

Triple Flag Precious

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Triple Flag Precious are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Triple Flag is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fresnillo PLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresnillo PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Fresnillo PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Triple Flag and Fresnillo PLC

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

The idea behind Triple Flag Precious and Fresnillo PLC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.