Correlation Between Gold Reserve and Newcrest Mining

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

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

Diversification Opportunities for Gold Reserve and Newcrest Mining

0.0

Correlation Coefficient

Gold Reserve  Newcrest Mining

Pay attention - limited upside

The 3 months correlation between Gold and Newcrest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Newcrest Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcrest Mining and Gold Reserve 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 Gold Reserve are associated (or correlated) with Newcrest Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcrest Mining has no effect on the direction of Gold Reserve i.e., Gold Reserve and Newcrest Mining go up and down completely randomly.

Pair Corralation between Gold Reserve and Newcrest Mining

If you would invest  155.00  in Gold Reserve on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Gold Reserve or generate 25.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Gold Reserve  vs.  Newcrest Mining

Gold Reserve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Reserve are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gold Reserve reported solid returns over the last few months and may actually be approaching a breakup point.

Newcrest Mining

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newcrest Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Newcrest Mining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Gold Reserve and Newcrest Mining

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

The idea behind Gold Reserve and Newcrest Mining 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.