Correlation Between BHP Group and NEWMONT PORATION
Can any of the company-specific risk be diversified away by investing in both BHP Group and NEWMONT PORATION 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 BHP Group and NEWMONT PORATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and NEWMONT PORATION CDI, you can compare the effects of market volatilities on BHP Group and NEWMONT PORATION 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 BHP Group with a short position of NEWMONT PORATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and NEWMONT PORATION.
Diversification Opportunities for BHP Group and NEWMONT PORATION
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between BHP and NEWMONT is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and NEWMONT PORATION CDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT PORATION CDI and BHP Group 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 BHP Group Limited are associated (or correlated) with NEWMONT PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT PORATION CDI has no effect on the direction of BHP Group i.e., BHP Group and NEWMONT PORATION go up and down completely randomly.
Pair Corralation between BHP Group and NEWMONT PORATION
Assuming the 90 days trading horizon BHP Group Limited is expected to under-perform the NEWMONT PORATION. But the stock apears to be less risky and, when comparing its historical volatility, BHP Group Limited is 1.54 times less risky than NEWMONT PORATION. The stock trades about -0.03 of its potential returns per unit of risk. The NEWMONT PORATION CDI is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,155 in NEWMONT PORATION CDI on August 28, 2024 and sell it today you would earn a total of 320.00 from holding NEWMONT PORATION CDI or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. NEWMONT PORATION CDI
Performance |
| Timeline |
| BHP Group Limited |
| NEWMONT PORATION CDI |
BHP Group and NEWMONT PORATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and NEWMONT PORATION
The main advantage of trading using opposite BHP Group and NEWMONT PORATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, NEWMONT PORATION 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 PORATION will offset losses from the drop in NEWMONT PORATION's long position.| BHP Group vs. Clime Investment Management | BHP Group vs. Mach7 Technologies | BHP Group vs. Air New Zealand | BHP Group vs. K2 Asset Management |
| NEWMONT PORATION vs. Iron Road | NEWMONT PORATION vs. Saferoads Holdings | NEWMONT PORATION vs. Perseus Mining | NEWMONT PORATION vs. Alto Metals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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