Correlation Between Stelar Metals and NEWMONT PORATION
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and NEWMONT PORATION 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 Stelar Metals and NEWMONT PORATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and NEWMONT PORATION CDI, you can compare the effects of market volatilities on Stelar Metals and NEWMONT PORATION 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 Stelar Metals with a short position of NEWMONT PORATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and NEWMONT PORATION.
Diversification Opportunities for Stelar Metals and NEWMONT PORATION
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stelar and NEWMONT is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and NEWMONT PORATION CDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT PORATION CDI and Stelar Metals 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 Stelar Metals are associated (or correlated) with NEWMONT PORATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT PORATION CDI has no effect on the direction of Stelar Metals i.e., Stelar Metals and NEWMONT PORATION go up and down completely randomly.
Pair Corralation between Stelar Metals and NEWMONT PORATION
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the NEWMONT PORATION. In addition to that, Stelar Metals is 1.63 times more volatile than NEWMONT PORATION CDI. It trades about -0.28 of its total potential returns per unit of risk. NEWMONT PORATION CDI is currently generating about -0.26 per unit of volatility. If you would invest 7,232 in NEWMONT PORATION CDI on August 29, 2024 and sell it today you would lose (792.00) from holding NEWMONT PORATION CDI or give up 10.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. NEWMONT PORATION CDI
Performance |
| Timeline |
| Stelar Metals |
| NEWMONT PORATION CDI |
Stelar Metals and NEWMONT PORATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and NEWMONT PORATION
The main advantage of trading using opposite Stelar Metals and NEWMONT PORATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, NEWMONT PORATION 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 PORATION will offset losses from the drop in NEWMONT PORATION's long position.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. Sandfire Resources NL |
| NEWMONT PORATION vs. Stelar Metals | NEWMONT PORATION vs. Kip McGrath Education | NEWMONT PORATION vs. Epsilon Healthcare | NEWMONT PORATION vs. Nova Eye Medical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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