Correlation Between IMPERIAL TOBACCO and Newmont
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Newmont 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 IMPERIAL TOBACCO and Newmont into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Newmont, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Newmont 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 IMPERIAL TOBACCO with a short position of Newmont. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Newmont.
Diversification Opportunities for IMPERIAL TOBACCO and Newmont
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IMPERIAL and Newmont is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with Newmont. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Newmont go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Newmont
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to under-perform the Newmont. But the stock apears to be less risky and, when comparing its historical volatility, IMPERIAL TOBACCO is 2.44 times less risky than Newmont. The stock trades about -0.07 of its potential returns per unit of risk. The Newmont is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,652 in Newmont on October 25, 2024 and sell it today you would earn a total of 349.00 from holding Newmont or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Newmont
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Newmont |
IMPERIAL TOBACCO and Newmont Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Newmont
The main advantage of trading using opposite IMPERIAL TOBACCO and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Newmont 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 will offset losses from the drop in Newmont's long position.| IMPERIAL TOBACCO vs. Minerals Technologies | IMPERIAL TOBACCO vs. Clean Energy Fuels | IMPERIAL TOBACCO vs. SOFI TECHNOLOGIES | IMPERIAL TOBACCO vs. THRACE PLASTICS |
| Newmont vs. Penn National Gaming | Newmont vs. VIVA WINE GROUP | Newmont vs. Media and Games | Newmont vs. NAKED WINES PLC |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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