Correlation Between Newmont Goldcorp and Hummingbird Resources

Can any of the company-specific risk be diversified away by investing in both Newmont Goldcorp and Hummingbird Resources 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 Hummingbird Resources 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 Hummingbird Resources PLC, you can compare the effects of market volatilities on Newmont Goldcorp and Hummingbird Resources 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 Hummingbird Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Goldcorp and Hummingbird Resources.

Diversification Opportunities for Newmont Goldcorp and Hummingbird Resources

0.79

Correlation Coefficient

Newmont Goldcorp  Hummingbird Resources

Poor diversification

The 3 months correlation between Newmont and Hummingbird is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp Corp and Hummingbird Resources PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hummingbird Resources PLC 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 Hummingbird Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hummingbird Resources PLC has no effect on the direction of Newmont Goldcorp i.e., Newmont Goldcorp and Hummingbird Resources go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and Hummingbird Resources

Considering the 90-day investment horizon Newmont Goldcorp Corp is expected to generate 0.17 times more return on investment than Hummingbird Resources. However, Newmont Goldcorp Corp is 5.74 times less risky than Hummingbird Resources. It trades about -0.13 of its potential returns per unit of risk. Hummingbird Resources PLC is currently generating about -0.06 per unit of risk. If you would invest  5,106  in Newmont Goldcorp Corp on September 4, 2024 and sell it today you would lose (1,015) from holding Newmont Goldcorp Corp or give up 19.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Newmont Goldcorp Corp  vs.  Hummingbird Resources PLC

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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hummingbird Resources PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hummingbird Resources PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Newmont Goldcorp and Hummingbird Resources

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

The idea behind Newmont Goldcorp Corp and Hummingbird Resources PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.