Correlation Between Newmont and Gold Road
Can any of the company-specific risk be diversified away by investing in both Newmont and Gold Road 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 Newmont and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont and Gold Road Resources, you can compare the effects of market volatilities on Newmont and Gold Road 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 Newmont with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and Gold Road.
Diversification Opportunities for Newmont and Gold Road
Very good diversification
The 3 months correlation between Newmont and Gold is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Newmont 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 Newmont are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Newmont i.e., Newmont and Gold Road go up and down completely randomly.
Pair Corralation between Newmont and Gold Road
Assuming the 90 days horizon Newmont is expected to under-perform the Gold Road. But the stock apears to be less risky and, when comparing its historical volatility, Newmont is 1.48 times less risky than Gold Road. The stock trades about -0.17 of its potential returns per unit of risk. The Gold Road Resources is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 113.00 in Gold Road Resources on September 24, 2024 and sell it today you would earn a total of 8.00 from holding Gold Road Resources or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newmont vs. Gold Road Resources
Performance |
| Timeline |
| Newmont |
| Gold Road Resources |
Newmont and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont and Gold Road
The main advantage of trading using opposite Newmont and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Newmont vs. ZIJIN MINH UNSPADR20 | Newmont vs. Barrick Gold | Newmont vs. Franco Nevada | Newmont vs. Agnico Eagle Mines |
| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Newmont | Gold Road vs. Barrick Gold | Gold Road 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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