Correlation Between Alliance Data and Newmont

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

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

Diversification Opportunities for Alliance Data and Newmont

-0.81

Correlation Coefficient

Alliance Data  Newmont

Pay attention - limited upside

The 3 months correlation between Alliance and Newmont is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont and Alliance Data 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 Alliance Data Systems 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 has no effect on the direction of Alliance Data i.e., Alliance Data and Newmont go up and down completely randomly.

Pair Corralation between Alliance Data and Newmont

Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 0.99 times more return on investment than Newmont. However, Alliance Data Systems is 1.01 times less risky than Newmont. It trades about -0.17 of its potential returns per unit of risk. Newmont is currently generating about -0.22 per unit of risk. If you would invest  6,138  in Alliance Data Systems on October 9, 2024 and sell it today you would lose (330.00) from holding Alliance Data Systems or give up 5.38% of portfolio value over 90 days.

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

Alliance Data Systems  vs.  Newmont

Alliance Data Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alliance Data Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Alliance Data unveiled solid returns over the last few months and may actually be approaching a breakup point.

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont 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 primary 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.

Pair Trading with Alliance Data and Newmont

The main advantage of trading using opposite Alliance Data and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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 Alliance Data Systems and Newmont 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.