Correlation Between Pan American and Newmont Goldcorp
Can any of the company-specific risk be diversified away by investing in both Pan American 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 Pan American and Newmont Goldcorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan American Silver and Newmont Goldcorp Corp, you can compare the effects of market volatilities on Pan American 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 Pan American with a short position of Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan American and Newmont Goldcorp.
Diversification Opportunities for Pan American and Newmont Goldcorp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pan and Newmont is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pan American Silver 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 Pan American 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 Pan American Silver 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 Pan American i.e., Pan American and Newmont Goldcorp go up and down completely randomly.
Pair Corralation between Pan American and Newmont Goldcorp
Given the investment horizon of 90 days Pan American is expected to generate 2.66 times less return on investment than Newmont Goldcorp. But when comparing it to its historical volatility, Pan American Silver is 1.35 times less risky than Newmont Goldcorp. It trades about 0.03 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,940 in Newmont Goldcorp Corp on February 6, 2024 and sell it today you would earn a total of 126.00 from holding Newmont Goldcorp Corp or generate 3.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pan American Silver vs. Newmont Goldcorp Corp
Performance |
Timeline |
Pan American Silver |
Newmont Goldcorp Corp |
Pan American and Newmont Goldcorp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pan American and Newmont Goldcorp
The main advantage of trading using opposite Pan American and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan American 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.Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
Newmont Goldcorp vs. Pan American Silver | Newmont Goldcorp vs. Agnico Eagle Mines | Newmont Goldcorp vs. Kinross Gold | Newmont Goldcorp vs. Wheaton Precious Metals |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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