Correlation Between BlackRock and NEWMONT

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

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

Diversification Opportunities for BlackRock and NEWMONT

-0.28

Correlation Coefficient

BlackRock  NEWMONT

Very good diversification

The 3 months correlation between BlackRock and NEWMONT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and NEWMONT MNG P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT MNG P and BlackRock 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 BlackRock are associated (or correlated) with NEWMONT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT MNG P has no effect on the direction of BlackRock i.e., BlackRock and NEWMONT go up and down completely randomly.

Pair Corralation between BlackRock and NEWMONT

Considering the 90-day investment horizon BlackRock is expected to generate 71.15 times less return on investment than NEWMONT. But when comparing it to its historical volatility, BlackRock is 76.47 times less risky than NEWMONT. It trades about 0.09 of its potential returns per unit of risk. NEWMONT MNG P is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,288  in NEWMONT MNG P on October 22, 2024 and sell it today you would lose (130.00) from holding NEWMONT MNG P or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.93%
Values	Daily Returns

BlackRock  vs.  NEWMONT MNG P

BlackRock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

NEWMONT MNG P

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days NEWMONT MNG P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NEWMONT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and NEWMONT

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

The idea behind BlackRock and NEWMONT MNG P 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.