Correlation Between Freeport McMoRan and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan and Newmont Corp 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 Freeport McMoRan and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Newmont Corp, you can compare the effects of market volatilities on Freeport McMoRan and Newmont Corp 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 Freeport McMoRan with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Newmont Corp.
Diversification Opportunities for Freeport McMoRan and Newmont Corp
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Freeport and Newmont is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Freeport McMoRan 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 Freeport McMoRan are associated (or correlated) with Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Freeport McMoRan i.e., Freeport McMoRan and Newmont Corp go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Newmont Corp
Assuming the 90 days trading horizon Freeport McMoRan is expected to under-perform the Newmont Corp. In addition to that, Freeport McMoRan is 1.09 times more volatile than Newmont Corp. It trades about -0.27 of its total potential returns per unit of risk. Newmont Corp is currently generating about -0.29 per unit of volatility. 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 |
Freeport McMoRan vs. Newmont Corp
Performance |
| Timeline |
| Freeport McMoRan |
| Newmont Corp |
Freeport McMoRan and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Newmont Corp
The main advantage of trading using opposite Freeport McMoRan and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.| Freeport McMoRan vs. Lowland Investment Co | Freeport McMoRan vs. Supermarket Income REIT | Freeport McMoRan vs. Aberdeen Diversified Income | Freeport McMoRan vs. Bankers Investment Trust |
| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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