Correlation Between Ecofin Global and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Ecofin Global 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 Ecofin Global and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and Newmont Corp, you can compare the effects of market volatilities on Ecofin Global 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 Ecofin Global with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Newmont Corp.
Diversification Opportunities for Ecofin Global and Newmont Corp
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecofin and Newmont is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Ecofin Global 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 Ecofin Global Utilities 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 Ecofin Global i.e., Ecofin Global and Newmont Corp go up and down completely randomly.
Pair Corralation between Ecofin Global and Newmont Corp
Assuming the 90 days trading horizon Ecofin Global is expected to generate 2.21 times less return on investment than Newmont Corp. In addition to that, Ecofin Global is 1.24 times more volatile than Newmont Corp. It trades about 0.19 of its total potential returns per unit of risk. Newmont Corp is currently generating about 0.51 per unit of volatility. If you would invest 3,723 in Newmont Corp on October 29, 2024 and sell it today you would earn a total of 511.00 from holding Newmont Corp or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Newmont Corp
Performance |
| Timeline |
| Ecofin Global Utilities |
| Newmont Corp |
Ecofin Global and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Newmont Corp
The main advantage of trading using opposite Ecofin Global and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global 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.| Ecofin Global vs. FC Investment Trust | Ecofin Global vs. Chrysalis Investments | Ecofin Global vs. Science in Sport | Ecofin Global vs. Ross Stores |
| Newmont Corp vs. Vitec Software Group | Newmont Corp vs. Beowulf Mining | Newmont Corp vs. CNH Industrial NV | Newmont Corp vs. Auction Technology 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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