Correlation Between Franco Nevada and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and Sprott Physical 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 Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and Sprott Physical Gold, you can compare the effects of market volatilities on Franco Nevada and Sprott Physical 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 Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and Sprott Physical.
Diversification Opportunities for Franco Nevada and Sprott Physical
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franco and Sprott is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Franco Nevada i.e., Franco Nevada and Sprott Physical go up and down completely randomly.
Pair Corralation between Franco Nevada and Sprott Physical
Considering the 90-day investment horizon Franco Nevada is expected to generate 1.8 times more return on investment than Sprott Physical. However, Franco Nevada is 1.8 times more volatile than Sprott Physical Gold. It trades about 0.09 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.06 per unit of risk. If you would invest 17,666 in Franco Nevada on June 4, 2025 and sell it today you would earn a total of 1,374 from holding Franco Nevada or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Franco Nevada vs. Sprott Physical Gold
Performance |
| Timeline |
| Franco Nevada |
| Sprott Physical Gold |
Franco Nevada and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franco Nevada and Sprott Physical
The main advantage of trading using opposite Franco Nevada and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, Sprott Physical 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 Sprott Physical will offset losses from the drop in Sprott Physical's long position.| Franco Nevada vs. Royal Gold | Franco Nevada vs. Agnico Eagle Mines | Franco Nevada vs. Pan American Silver | Franco Nevada vs. Sandstorm Gold Ltd |
| Sprott Physical vs. Sprott Physical Gold | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Sprott Inc | Sprott Physical vs. Brookfield Real Assets |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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