Correlation Between Newmont Corp and TBC Bank

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

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

Diversification Opportunities for Newmont Corp and TBC Bank

0.76

Correlation Coefficient

Newmont Corp  TBC Bank

Poor diversification

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

Pair Corralation between Newmont Corp and TBC Bank

Assuming the 90 days trading horizon Newmont Corp is expected to generate 1.62 times less return on investment than TBC Bank. But when comparing it to its historical volatility, Newmont Corp is 1.13 times less risky than TBC Bank. It trades about 0.19 of its potential returns per unit of risk. TBC Bank Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  307,500  in TBC Bank Group on December 23, 2024 and sell it today you would earn a total of  133,500  from holding TBC Bank Group or generate 43.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Newmont Corp  vs.  TBC Bank Group

Newmont Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Newmont Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

TBC Bank Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmont Corp and TBC Bank

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

The idea behind Newmont Corp and TBC Bank Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.