Correlation Between Newmont Corp and EJF Investments

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

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

Diversification Opportunities for Newmont Corp and EJF Investments

-0.47

Correlation Coefficient

Newmont Corp  EJF Investments

Very good diversification

The 3 months correlation between Newmont and EJF is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Corp and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Newmont Corp i.e., Newmont Corp and EJF Investments go up and down completely randomly.

Pair Corralation between Newmont Corp and EJF Investments

Assuming the 90 days trading horizon Newmont Corp is expected to under-perform the EJF Investments. In addition to that, Newmont Corp is 1.57 times more volatile than EJF Investments. It trades about -0.01 of its total potential returns per unit of risk. EJF Investments is currently generating about 0.09 per unit of volatility. If you would invest  9,814  in EJF Investments on October 9, 2024 and sell it today you would earn a total of  2,086  from holding EJF Investments or generate 21.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

Newmont Corp  vs.  EJF Investments

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 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.

EJF Investments

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Newmont Corp and EJF Investments

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

The idea behind Newmont Corp and EJF Investments 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.