Correlation Between VF Corp and Newmont Corp

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Can any of the company-specific risk be diversified away by investing in both VF Corp 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 VF Corp and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VF Corp and Newmont Corp, you can compare the effects of market volatilities on VF Corp 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 VF Corp with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of VF Corp and Newmont Corp.

Diversification Opportunities for VF Corp and Newmont Corp

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between 0R30 and Newmont is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding VF Corp and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and VF 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 VF Corp 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 VF Corp i.e., VF Corp and Newmont Corp go up and down completely randomly.

Pair Corralation between VF Corp and Newmont Corp

Assuming the 90 days trading horizon VF Corp is expected to generate 1.6 times more return on investment than Newmont Corp. However, VF Corp is 1.6 times more volatile than Newmont Corp. It trades about 0.01 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.01 per unit of risk. If you would invest  2,597  in VF Corp on September 24, 2024 and sell it today you would lose (368.00) from holding VF Corp or give up 14.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.99%
ValuesDaily Returns

VF Corp  vs.  Newmont Corp

 Performance 
       Timeline  
VF Corp 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in VF Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VF Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.
Newmont Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Newmont Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

VF Corp and Newmont Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VF Corp and Newmont Corp

The main advantage of trading using opposite VF Corp and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VF Corp 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.
The idea behind VF Corp and Newmont Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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