Correlation Between Harmony Gold and Newmont Goldcorp
Can any of the company-specific risk be diversified away by investing in both Harmony Gold and Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp Corp, you can compare the effects of market volatilities on Harmony Gold and Newmont Goldcorp 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 Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Newmont Goldcorp.
Diversification Opportunities for Harmony Gold and Newmont Goldcorp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and Newmont is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp 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 Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Harmony Gold i.e., Harmony Gold and Newmont Goldcorp go up and down completely randomly.
Pair Corralation between Harmony Gold and Newmont Goldcorp
Considering the 90-day investment horizon Harmony Gold Mining is expected to generate 1.56 times more return on investment than Newmont Goldcorp. However, Harmony Gold is 1.56 times more volatile than Newmont Goldcorp Corp. It trades about 0.09 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.01 per unit of risk. If you would invest 331.00 in Harmony Gold Mining on August 27, 2024 and sell it today you would earn a total of 632.00 from holding Harmony Gold Mining or generate 190.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Newmont Goldcorp Corp
Performance |
| Timeline |
| Harmony Gold Mining |
| Newmont Goldcorp Corp |
Harmony Gold and Newmont Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Newmont Goldcorp
The main advantage of trading using opposite Harmony Gold and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold position performs unexpectedly, Newmont Goldcorp 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 Goldcorp will offset losses from the drop in Newmont Goldcorp's long position.The idea behind Harmony Gold Mining and Newmont Goldcorp 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.| Newmont Goldcorp vs. Pan American Silver | Newmont Goldcorp vs. Agnico Eagle Mines | Newmont Goldcorp vs. Kinross Gold | Newmont Goldcorp vs. Wheaton Precious 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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