Correlation Between Mesabi Trust and Newmont Goldcorp

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

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

Diversification Opportunities for Mesabi Trust and Newmont Goldcorp

0.66

Correlation Coefficient

Mesabi Trust  Newmont Goldcorp

Poor diversification

The 3 months correlation between Mesabi and Newmont is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between Mesabi Trust and Newmont Goldcorp

Considering the 90-day investment horizon Mesabi Trust is expected to generate 1.42 times less return on investment than Newmont Goldcorp. In addition to that, Mesabi Trust is 2.01 times more volatile than Newmont Goldcorp Corp. It trades about 0.08 of its total potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.24 per unit of volatility. If you would invest  3,678  in Newmont Goldcorp Corp on December 28, 2024 and sell it today you would earn a total of  1,161  from holding Newmont Goldcorp Corp or generate 31.57% return on investment over 90 days.

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

Mesabi Trust  vs.  Newmont Goldcorp Corp

Mesabi Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mesabi Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mesabi Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Newmont Goldcorp Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Newmont Goldcorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesabi Trust and Newmont Goldcorp

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

The idea behind Mesabi Trust and Newmont Goldcorp Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.