Correlation Between Harmony Gold and NextEra Energy
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and NextEra Energy 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 Harmony Gold and NextEra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and NextEra Energy, you can compare the effects of market volatilities on Harmony Gold and NextEra Energy 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 Harmony Gold with a short position of NextEra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and NextEra Energy.
Diversification Opportunities for Harmony Gold and NextEra Energy
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Harmony and NextEra is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and NextEra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextEra Energy and Harmony Gold 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 Harmony Gold Mining are associated (or correlated) with NextEra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextEra Energy has no effect on the direction of Harmony Gold i.e., Harmony Gold and NextEra Energy go up and down completely randomly.
Pair Corralation between Harmony Gold and NextEra Energy
Assuming the 90 days horizon Harmony Gold Mining is expected to generate 2.05 times more return on investment than NextEra Energy. However, Harmony Gold is 2.05 times more volatile than NextEra Energy. It trades about 0.03 of its potential returns per unit of risk. NextEra Energy is currently generating about 0.03 per unit of risk. If you would invest 780.00 in Harmony Gold Mining on September 5, 2024 and sell it today you would earn a total of 60.00 from holding Harmony Gold Mining or generate 7.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Harmony Gold Mining vs. NextEra Energy
Performance |
| Timeline |
| Harmony Gold Mining |
| NextEra Energy |
Harmony Gold and NextEra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and NextEra Energy
The main advantage of trading using opposite Harmony Gold and NextEra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, NextEra Energy 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 NextEra Energy will offset losses from the drop in NextEra Energy's long position.| Harmony Gold vs. NAKED WINES PLC | Harmony Gold vs. HEALTHCARE REAL A | Harmony Gold vs. Perseus Mining Limited | Harmony Gold vs. CHINA TONTINE WINES |
| NextEra Energy vs. Perseus Mining Limited | NextEra Energy vs. Harmony Gold Mining | NextEra Energy vs. SHIP HEALTHCARE HLDGINC | NextEra Energy vs. Jacquet Metal Service |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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