Correlation Between Newcrest Mining and Red 5
Can any of the company-specific risk be diversified away by investing in both Newcrest Mining and Red 5 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 Red 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newcrest Mining and Red 5 Limited, you can compare the effects of market volatilities on Newcrest Mining and Red 5 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 Red 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcrest Mining and Red 5.
Diversification Opportunities for Newcrest Mining and Red 5
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newcrest and Red is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and Red 5 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red 5 Limited 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 Red 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red 5 Limited has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and Red 5 go up and down completely randomly.
Pair Corralation between Newcrest Mining and Red 5
If you would invest 25.00 in Red 5 Limited on September 1, 2024 and sell it today you would lose (3.00) from holding Red 5 Limited or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 0.79% |
| Values | Daily Returns |
Newcrest Mining vs. Red 5 Limited
Performance |
| Timeline |
| Newcrest Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Red 5 Limited |
Newcrest Mining and Red 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newcrest Mining and Red 5
The main advantage of trading using opposite Newcrest Mining and Red 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcrest Mining position performs unexpectedly, Red 5 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 Red 5 will offset losses from the drop in Red 5's long position.| Newcrest Mining vs. Big Ridge Gold | Newcrest Mining vs. Westhaven Gold Corp | Newcrest Mining vs. Satori Resources | Newcrest Mining vs. K92 Mining |
| Red 5 vs. Cerrado Gold | Red 5 vs. First Mining Gold | Red 5 vs. American Pacific Mining | Red 5 vs. Cache Exploration |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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