Correlation Between Newmont Corp and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Newmont Corp and Freeport McMoRan 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 Freeport McMoRan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont Corp and Freeport McMoRan, you can compare the effects of market volatilities on Newmont Corp and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Corp and Freeport McMoRan.
Diversification Opportunities for Newmont Corp and Freeport McMoRan
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Newmont and Freeport is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Newmont Corp i.e., Newmont Corp and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Newmont Corp and Freeport McMoRan
Assuming the 90 days trading horizon Newmont Corp is expected to generate 0.91 times more return on investment than Freeport McMoRan. However, Newmont Corp is 1.09 times less risky than Freeport McMoRan. It trades about -0.29 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.27 per unit of risk. If you would invest 4,180 in Newmont Corp on September 24, 2024 and sell it today you would lose (456.00) from holding Newmont Corp or give up 10.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Newmont Corp vs. Freeport McMoRan
Performance |
| Timeline |
| Newmont Corp |
| Freeport McMoRan |
Newmont Corp and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont Corp and Freeport McMoRan
The main advantage of trading using opposite Newmont Corp and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont Corp position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
| Freeport McMoRan vs. Lowland Investment Co | Freeport McMoRan vs. Supermarket Income REIT | Freeport McMoRan vs. Aberdeen Diversified Income | Freeport McMoRan vs. Bankers Investment Trust |
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 CEOs Directory module to screen CEOs from public companies around the world.
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