Correlation Between Newmont and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Newmont and Harmony Gold 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 Harmony Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newmont and Harmony Gold Mining, you can compare the effects of market volatilities on Newmont and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and Harmony Gold.
Diversification Opportunities for Newmont and Harmony Gold
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Newmont and Harmony is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Newmont i.e., Newmont and Harmony Gold go up and down completely randomly.
Pair Corralation between Newmont and Harmony Gold
Assuming the 90 days horizon Newmont is expected to generate 2.28 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Newmont is 1.32 times less risky than Harmony Gold. It trades about 0.06 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 497.00 in Harmony Gold Mining on December 11, 2024 and sell it today you would earn a total of 523.00 from holding Harmony Gold Mining or generate 105.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Newmont vs. Harmony Gold Mining
Performance |
| Timeline |
| Newmont |
| Harmony Gold Mining |
Newmont and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newmont and Harmony Gold
The main advantage of trading using opposite Newmont and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newmont position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Newmont vs. Suntory Beverage Food | Newmont vs. Ming Le Sports | Newmont vs. ANTA Sports Products | Newmont vs. Moneysupermarket Group PLC |
| Harmony Gold vs. ZIJIN MINH UNSPADR20 | Harmony Gold vs. Newmont | Harmony Gold vs. Barrick Gold | Harmony Gold 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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