Correlation Between Newcrest Mining and FireFox Gold

Can any of the company-specific risk be diversified away by investing in both Newcrest Mining and FireFox 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 Newcrest Mining and FireFox Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newcrest Mining and FireFox Gold Corp, you can compare the effects of market volatilities on Newcrest Mining and FireFox 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 Newcrest Mining with a short position of FireFox Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcrest Mining and FireFox Gold.

Diversification Opportunities for Newcrest Mining and FireFox Gold

-0.33

Correlation Coefficient

Newcrest Mining  FireFox Gold

Very good diversification

The 3 months correlation between Newcrest and FireFox is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and FireFox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFox Gold Corp 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 FireFox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFox Gold Corp has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and FireFox Gold go up and down completely randomly.

Pair Corralation between Newcrest Mining and FireFox Gold

If you would invest  2.90  in FireFox Gold Corp on September 3, 2024 and sell it today you would lose (0.03) from holding FireFox Gold Corp or give up 1.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.54%
Values	Daily Returns

Newcrest Mining  vs.  FireFox Gold Corp

Newcrest Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcrest Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Newcrest Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FireFox Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FireFox Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, FireFox Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newcrest Mining and FireFox Gold

The main advantage of trading using opposite Newcrest Mining and FireFox Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcrest Mining position performs unexpectedly, FireFox 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 FireFox Gold will offset losses from the drop in FireFox Gold's long position.

The idea behind Newcrest Mining and FireFox Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.