Correlation Between Newmont Corp and Melia Hotels
Can any of the company-specific risk be diversified away by investing in both Newmont Corp and Melia Hotels 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 Newmont Corp and Melia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont Corp and Melia Hotels, you can compare the effects of market volatilities on Newmont Corp and Melia Hotels 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 Newmont Corp with a short position of Melia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Corp and Melia Hotels.
Diversification Opportunities for Newmont Corp and Melia Hotels
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Newmont and Melia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and Melia Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melia Hotels and Newmont Corp 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 Newmont Corp are associated (or correlated) with Melia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melia Hotels has no effect on the direction of Newmont Corp i.e., Newmont Corp and Melia Hotels go up and down completely randomly.
Pair Corralation between Newmont Corp and Melia Hotels
Assuming the 90 days trading horizon Newmont Corp is expected to generate 1.08 times more return on investment than Melia Hotels. However, Newmont Corp is 1.08 times more volatile than Melia Hotels. It trades about 0.51 of its potential returns per unit of risk. Melia Hotels is currently generating about -0.18 per unit of risk. If you would invest 3,723 in Newmont Corp on October 29, 2024 and sell it today you would earn a total of 511.00 from holding Newmont Corp or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newmont Corp vs. Melia Hotels
Performance |
| Timeline |
| Newmont Corp |
| Melia Hotels |
Newmont Corp and Melia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont Corp and Melia Hotels
The main advantage of trading using opposite Newmont Corp and Melia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont Corp position performs unexpectedly, Melia Hotels 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 Melia Hotels will offset losses from the drop in Melia Hotels' long position.| Newmont Corp vs. Vitec Software Group | Newmont Corp vs. Beowulf Mining | Newmont Corp vs. CNH Industrial NV | Newmont Corp vs. Auction Technology Group |
| Melia Hotels vs. Home Depot | Melia Hotels vs. Schroders Investment Trusts | Melia Hotels vs. Bankers Investment Trust | Melia Hotels vs. Livermore Investments Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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