Correlation Between MP Materials and Newmont Goldcorp
Can any of the company-specific risk be diversified away by investing in both MP Materials 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 MP Materials and Newmont Goldcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MP Materials Corp and Newmont Goldcorp Corp, you can compare the effects of market volatilities on MP Materials 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 MP Materials with a short position of Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of MP Materials and Newmont Goldcorp.
Diversification Opportunities for MP Materials and Newmont Goldcorp
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MP Materials and Newmont is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MP Materials Corp 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 MP Materials 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 MP Materials Corp 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 MP Materials i.e., MP Materials and Newmont Goldcorp go up and down completely randomly.
Pair Corralation between MP Materials and Newmont Goldcorp
Allowing for the 90-day total investment horizon MP Materials Corp is expected to generate 0.73 times more return on investment than Newmont Goldcorp. However, MP Materials Corp is 1.37 times less risky than Newmont Goldcorp. It trades about 0.09 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about -0.34 per unit of risk. If you would invest 1,787 in MP Materials Corp on August 24, 2024 and sell it today you would earn a total of 86.00 from holding MP Materials Corp or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MP Materials Corp vs. Newmont Goldcorp Corp
Performance |
| Timeline |
| MP Materials Corp |
| Newmont Goldcorp Corp |
MP Materials and Newmont Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MP Materials and Newmont Goldcorp
The main advantage of trading using opposite MP Materials and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MP Materials 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.| MP Materials vs. Piedmont Lithium Ltd | MP Materials vs. Sigma Lithium Resources | MP Materials vs. Standard Lithium | MP Materials vs. Vale SA ADR |
| Newmont Goldcorp vs. Gold Fields Ltd | Newmont Goldcorp vs. Barrick Gold Corp | Newmont Goldcorp vs. Pan American Silver | Newmont Goldcorp vs. Franco Nevada |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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