Correlation Between Smithson Investment and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Smithson Investment and Newmont Corp 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 Smithson Investment and Newmont Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smithson Investment Trust and Newmont Corp, you can compare the effects of market volatilities on Smithson Investment and Newmont Corp 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 Smithson Investment with a short position of Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smithson Investment and Newmont Corp.
Diversification Opportunities for Smithson Investment and Newmont Corp
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Smithson and Newmont is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Smithson Investment Trust and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Smithson Investment 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 Smithson Investment Trust are associated (or correlated) with Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Smithson Investment i.e., Smithson Investment and Newmont Corp go up and down completely randomly.
Pair Corralation between Smithson Investment and Newmont Corp
Assuming the 90 days trading horizon Smithson Investment Trust is expected to generate 0.58 times more return on investment than Newmont Corp. However, Smithson Investment Trust is 1.72 times less risky than Newmont Corp. It trades about 0.02 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.01 per unit of risk. If you would invest 133,100 in Smithson Investment Trust on September 24, 2024 and sell it today you would earn a total of 13,900 from holding Smithson Investment Trust or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.81% |
| Values | Daily Returns |
Smithson Investment Trust vs. Newmont Corp
Performance |
| Timeline |
| Smithson Investment Trust |
| Newmont Corp |
Smithson Investment and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smithson Investment and Newmont Corp
The main advantage of trading using opposite Smithson Investment and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson Investment position performs unexpectedly, Newmont Corp 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 Corp will offset losses from the drop in Newmont Corp's long position.| Smithson Investment vs. Austevoll Seafood ASA | Smithson Investment vs. Cornish Metals | Smithson Investment vs. AMG Advanced Metallurgical | Smithson Investment vs. Axfood AB |
| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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