Correlation Between Newmont Goldcorp and American Eagle

Can any of the company-specific risk be diversified away by investing in both Newmont Goldcorp and American Eagle 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 Goldcorp and American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Newmont Goldcorp and American Eagle

-0.85

Correlation Coefficient

Newmont Goldcorp  American Eagle

Pay attention - limited upside

The 3 months correlation between Newmont and American is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp Corp and American Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Gold and Newmont Goldcorp 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 Goldcorp Corp are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Gold has no effect on the direction of Newmont Goldcorp i.e., Newmont Goldcorp and American Eagle go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and American Eagle

Considering the 90-day investment horizon Newmont Goldcorp Corp is expected to under-perform the American Eagle. But the stock apears to be less risky and, when comparing its historical volatility, Newmont Goldcorp Corp is 2.76 times less risky than American Eagle. The stock trades about -0.12 of its potential returns per unit of risk. The American Eagle Gold is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  30.00  in American Eagle Gold on September 1, 2024 and sell it today you would earn a total of  37.00  from holding American Eagle Gold or generate 123.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Newmont Goldcorp Corp  vs.  American Eagle Gold

Newmont Goldcorp Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont Goldcorp Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

American Eagle Gold

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Eagle Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, American Eagle reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmont Goldcorp and American Eagle

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

The idea behind Newmont Goldcorp Corp and American Eagle Gold 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.