Correlation Between Newcrest Mining and Elemental Royalties

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

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

Diversification Opportunities for Newcrest Mining and Elemental Royalties

-0.61

Correlation Coefficient

Newcrest Mining  Elemental Royalties

Excellent diversification

The 3 months correlation between Newcrest and Elemental is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Newcrest Mining and Elemental Royalties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elemental Royalties Corp and Newcrest Mining 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 Newcrest Mining are associated (or correlated) with Elemental Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elemental Royalties Corp has no effect on the direction of Newcrest Mining i.e., Newcrest Mining and Elemental Royalties go up and down completely randomly.

Pair Corralation between Newcrest Mining and Elemental Royalties

If you would invest  74.00  in Elemental Royalties Corp on September 1, 2024 and sell it today you would earn a total of  7.00  from holding Elemental Royalties Corp or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.59%
Values	Daily Returns

Newcrest Mining  vs.  Elemental Royalties Corp

Newcrest Mining

Risk-Adjusted Performance

0 of 100

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.

Elemental Royalties Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elemental Royalties Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Elemental Royalties may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Newcrest Mining and Elemental Royalties

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

The idea behind Newcrest Mining and Elemental Royalties 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.