Correlation Between Newmont and Computer

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

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

Diversification Opportunities for Newmont and Computer

0.76

Correlation Coefficient

Newmont  Computer

Poor diversification

The 3 months correlation between Newmont and Computer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies and Newmont 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 are associated (or correlated) with Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of Newmont i.e., Newmont and Computer go up and down completely randomly.

Pair Corralation between Newmont and Computer

Assuming the 90 days horizon Newmont is expected to under-perform the Computer. In addition to that, Newmont is 1.32 times more volatile than Computer And Technologies. It trades about -0.09 of its total potential returns per unit of risk. Computer And Technologies is currently generating about -0.07 per unit of volatility. If you would invest  21.00  in Computer And Technologies on September 12, 2024 and sell it today you would lose (2.00) from holding Computer And Technologies or give up 9.52% of portfolio value over 90 days.

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

Newmont  vs.  Computer And Technologies

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady 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.

Computer And Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer And Technologies 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 Newmont and Computer

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

The idea behind Newmont and Computer And Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.