Correlation Between Newmont Corp and Ecofin Global

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

By analyzing existing cross correlation between Newmont Corp and Ecofin Global Utilities, you can compare the effects of market volatilities on Newmont Corp and Ecofin Global 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 Ecofin Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Corp and Ecofin Global.

Diversification Opportunities for Newmont Corp and Ecofin Global

0.64

Correlation Coefficient

Newmont Corp  Ecofin Global

Poor diversification

The 3 months correlation between Newmont and Ecofin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and Ecofin Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofin Global Utilities 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 Ecofin Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofin Global Utilities has no effect on the direction of Newmont Corp i.e., Newmont Corp and Ecofin Global go up and down completely randomly.

Pair Corralation between Newmont Corp and Ecofin Global

Assuming the 90 days trading horizon Newmont Corp is expected to generate 1.77 times more return on investment than Ecofin Global. However, Newmont Corp is 1.77 times more volatile than Ecofin Global Utilities. It trades about -0.01 of its potential returns per unit of risk. Ecofin Global Utilities is currently generating about -0.01 per unit of risk. If you would invest  4,977  in Newmont Corp on October 23, 2024 and sell it today you would lose (814.00) from holding Newmont Corp or give up 16.36% of portfolio value over 90 days.

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

Newmont Corp  vs.  Ecofin Global Utilities

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.

Ecofin Global Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofin Global Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ecofin Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Newmont Corp and Ecofin Global

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

The idea behind Newmont Corp and Ecofin Global Utilities 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.