Correlation Between Newcrest Mining and Brunswick Exploration

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

By analyzing existing cross correlation between Newcrest Mining and Brunswick Exploration, you can compare the effects of market volatilities on Newcrest Mining and Brunswick Exploration 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 Brunswick Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcrest Mining and Brunswick Exploration.

Diversification Opportunities for Newcrest Mining and Brunswick Exploration

-0.66

Correlation Coefficient

Newcrest Mining  Brunswick Exploration

Excellent diversification

The 3 months correlation between Newcrest and Brunswick is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and Brunswick Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick Exploration 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 Brunswick Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick Exploration has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and Brunswick Exploration go up and down completely randomly.

Pair Corralation between Newcrest Mining and Brunswick Exploration

Assuming the 90 days horizon Newcrest Mining is expected to generate 0.34 times more return on investment than Brunswick Exploration. However, Newcrest Mining is 2.95 times less risky than Brunswick Exploration. It trades about 0.09 of its potential returns per unit of risk. Brunswick Exploration is currently generating about 0.0 per unit of risk. If you would invest  1,368  in Newcrest Mining on September 13, 2024 and sell it today you would earn a total of  437.00  from holding Newcrest Mining or generate 31.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	29.35%
Values	Daily Returns

Newcrest Mining  vs.  Brunswick Exploration

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. In spite of fairly strong technical and fundamental indicators, Newcrest Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Brunswick Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brunswick Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Newcrest Mining and Brunswick Exploration

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

The idea behind Newcrest Mining and Brunswick Exploration 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 Transaction History module to view history of all your transactions and understand their impact on performance.