Correlation Between Newmont Corp and London Security
Can any of the company-specific risk be diversified away by investing in both Newmont Corp and London Security 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 London Security into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont Corp and London Security Plc, you can compare the effects of market volatilities on Newmont Corp and London Security 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 London Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Corp and London Security.
Diversification Opportunities for Newmont Corp and London Security
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newmont and London is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and London Security Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on London Security 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 London Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of London Security Plc has no effect on the direction of Newmont Corp i.e., Newmont Corp and London Security go up and down completely randomly.
Pair Corralation between Newmont Corp and London Security
Assuming the 90 days trading horizon Newmont Corp is expected to under-perform the London Security. In addition to that, Newmont Corp is 1.46 times more volatile than London Security Plc. It trades about -0.01 of its total potential returns per unit of risk. London Security Plc is currently generating about 0.03 per unit of volatility. If you would invest 282,151 in London Security Plc on October 13, 2024 and sell it today you would earn a total of 57,849 from holding London Security Plc or generate 20.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.4% |
| Values | Daily Returns |
Newmont Corp vs. London Security Plc
Performance |
| Timeline |
| Newmont Corp |
| London Security Plc |
Newmont Corp and London Security Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont Corp and London Security
The main advantage of trading using opposite Newmont Corp and London Security positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont Corp position performs unexpectedly, London Security 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 London Security will offset losses from the drop in London Security's long position.| Newmont Corp vs. Gear4music Plc | Newmont Corp vs. Taylor Maritime Investments | Newmont Corp vs. Zoom Video Communications | Newmont Corp vs. Science in Sport |
| London Security vs. Virgin Wines UK | London Security vs. URU Metals | London Security vs. Gaztransport et Technigaz | London Security vs. Vitec Software 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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