Correlation Between Newmont Corp and Lennar Corp

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

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

Diversification Opportunities for Newmont Corp and Lennar Corp

0.76

Correlation Coefficient

Newmont Corp  Lennar Corp

Poor diversification

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

Pair Corralation between Newmont Corp and Lennar Corp

Assuming the 90 days trading horizon Newmont Corp is expected to generate 1.22 times more return on investment than Lennar Corp. However, Newmont Corp is 1.22 times more volatile than Lennar Corp Cl. It trades about -0.18 of its potential returns per unit of risk. Lennar Corp Cl is currently generating about -0.56 per unit of risk. If you would invest  4,141  in Newmont Corp on October 6, 2024 and sell it today you would lose (304.00) from holding Newmont Corp or give up 7.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Newmont Corp  vs.  Lennar Corp Cl

Newmont Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lennar Corp Cl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lennar Corp Cl 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Newmont Corp and Lennar Corp

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

The idea behind Newmont Corp and Lennar Corp Cl 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.