Correlation Between Newmont Corp and BP Plc
Can any of the company-specific risk be diversified away by investing in both Newmont Corp and BP 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 Newmont Corp and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont Corp and BP plc, you can compare the effects of market volatilities on Newmont Corp and BP 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 Newmont Corp with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Corp and BP Plc.
Diversification Opportunities for Newmont Corp and BP Plc
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Newmont and BP-A is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Newmont Corp i.e., Newmont Corp and BP Plc go up and down completely randomly.
Pair Corralation between Newmont Corp and BP Plc
Assuming the 90 days trading horizon Newmont Corp is expected to generate 1.63 times more return on investment than BP Plc. However, Newmont Corp is 1.63 times more volatile than BP plc. It trades about 0.0 of its potential returns per unit of risk. BP plc is currently generating about -0.03 per unit of risk. If you would invest 4,554 in Newmont Corp on November 2, 2024 and sell it today you would lose (344.00) from holding Newmont Corp or give up 7.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Newmont Corp vs. BP plc
Performance |
| Timeline |
| Newmont Corp |
| BP plc |
Newmont Corp and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont Corp and BP Plc
The main advantage of trading using opposite Newmont Corp and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont Corp position performs unexpectedly, BP 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 BP Plc will offset losses from the drop in BP Plc's long position.| Newmont Corp vs. Gaztransport et Technigaz | Newmont Corp vs. Spirent Communications plc | Newmont Corp vs. Geely Automobile Holdings | Newmont Corp vs. Symphony Environmental Technologies |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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