Correlation Between Franco Nevada and Barrick Gold

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

Diversification Opportunities for Franco Nevada and Barrick Gold

-0.24

Correlation Coefficient

Franco Nevada  Barrick Gold

Very good diversification

The 3 months correlation between Franco and Barrick is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Barrick Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrick Gold 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 Barrick Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrick Gold Corp has no effect on the direction of Franco Nevada i.e., Franco Nevada and Barrick Gold go up and down completely randomly.

Pair Corralation between Franco Nevada and Barrick Gold

Assuming the 90 days trading horizon Franco Nevada is expected to under-perform the Barrick Gold. But the stock apears to be less risky and, when comparing its historical volatility, Franco Nevada is 1.12 times less risky than Barrick Gold. The stock trades about -0.07 of its potential returns per unit of risk. The Barrick Gold Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,680  in Barrick Gold Corp on April 24, 2025 and sell it today you would earn a total of  278.00  from holding Barrick Gold Corp or generate 10.37% return on investment over 90 days.

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

Franco Nevada  vs.  Barrick Gold Corp

Franco Nevada

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Barrick Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barrick Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Barrick Gold may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Franco Nevada and Barrick Gold

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

The idea behind Franco Nevada and Barrick Gold 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.