Correlation Between Charter Communications and Newmont Corp

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

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

Diversification Opportunities for Charter Communications and Newmont Corp

0.36

Correlation Coefficient

Charter Communications  Newmont Corp

Weak diversification

The 3 months correlation between Charter and Newmont is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp and Charter Communications 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 Charter Communications Cl are associated (or correlated) with Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Charter Communications i.e., Charter Communications and Newmont Corp go up and down completely randomly.

Pair Corralation between Charter Communications and Newmont Corp

Assuming the 90 days trading horizon Charter Communications is expected to generate 3.93 times less return on investment than Newmont Corp. But when comparing it to its historical volatility, Charter Communications Cl is 1.0 times less risky than Newmont Corp. It trades about 0.05 of its potential returns per unit of risk. Newmont Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,773  in Newmont Corp on December 25, 2024 and sell it today you would earn a total of  991.00  from holding Newmont Corp or generate 26.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Charter Communications Cl  vs.  Newmont Corp

Charter Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications Cl are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Newmont Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Newmont Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charter Communications and Newmont Corp

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

The idea behind Charter Communications Cl and Newmont 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.