Correlation Between South Pacific and Newmont Goldcorp

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

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

Diversification Opportunities for South Pacific and Newmont Goldcorp

0.4

Correlation Coefficient

South Pacific  Newmont Goldcorp

Very weak diversification

The 3 months correlation between South and Newmont is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp and South Pacific 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 South Pacific Metals are associated (or correlated) with Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of South Pacific i.e., South Pacific and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between South Pacific and Newmont Goldcorp

Assuming the 90 days trading horizon South Pacific Metals is expected to under-perform the Newmont Goldcorp. In addition to that, South Pacific is 1.91 times more volatile than Newmont Goldcorp Corp. It trades about -0.11 of its total potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about -0.17 per unit of volatility. If you would invest  7,231  in Newmont Goldcorp Corp on September 30, 2024 and sell it today you would lose (1,776) from holding Newmont Goldcorp Corp or give up 24.56% of portfolio value over 90 days.

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

South Pacific Metals  vs.  Newmont Goldcorp Corp

South Pacific Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days South Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

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 abnormal performance in the last few months, the Stock's basic 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.

Pair Trading with South Pacific and Newmont Goldcorp

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

The idea behind South Pacific Metals and Newmont Goldcorp 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.