Correlation Between Newcrest Mining and GFG Resources
Can any of the company-specific risk be diversified away by investing in both Newcrest Mining and GFG Resources 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 Newcrest Mining and GFG Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newcrest Mining and GFG Resources, you can compare the effects of market volatilities on Newcrest Mining and GFG Resources 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 Newcrest Mining with a short position of GFG Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcrest Mining and GFG Resources.
Diversification Opportunities for Newcrest Mining and GFG Resources
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Newcrest and GFG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and GFG Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GFG Resources and Newcrest Mining 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 Newcrest Mining are associated (or correlated) with GFG Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GFG Resources has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and GFG Resources go up and down completely randomly.
Pair Corralation between Newcrest Mining and GFG Resources
Assuming the 90 days horizon Newcrest Mining is expected to generate 1.33 times less return on investment than GFG Resources. But when comparing it to its historical volatility, Newcrest Mining is 2.41 times less risky than GFG Resources. It trades about 0.04 of its potential returns per unit of risk. GFG Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11.00 in GFG Resources on September 1, 2024 and sell it today you would earn a total of 0.00 from holding GFG Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
Newcrest Mining vs. GFG Resources
Performance |
| Timeline |
| Newcrest Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| GFG Resources |
Newcrest Mining and GFG Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newcrest Mining and GFG Resources
The main advantage of trading using opposite Newcrest Mining and GFG Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcrest Mining position performs unexpectedly, GFG Resources 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 GFG Resources will offset losses from the drop in GFG Resources' long position.| Newcrest Mining vs. Big Ridge Gold | Newcrest Mining vs. Westhaven Gold Corp | Newcrest Mining vs. Satori Resources | Newcrest Mining vs. K92 Mining |
| GFG Resources vs. Aurion Resources | GFG Resources vs. Rio2 Limited | GFG Resources vs. Palamina Corp | GFG Resources vs. BTU Metals Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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