Correlation Between Newmont Goldcorp and Dow

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

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

Diversification Opportunities for Newmont Goldcorp and Dow

-0.53

Correlation Coefficient

Newmont Goldcorp  Dow

Excellent diversification

The 3 months correlation between Newmont and Dow is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp Corp and Dow Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Inc and Newmont Goldcorp 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 Newmont Goldcorp Corp are associated (or correlated) with Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Inc has no effect on the direction of Newmont Goldcorp i.e., Newmont Goldcorp and Dow go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and Dow

Considering the 90-day investment horizon Newmont Goldcorp Corp is expected to generate 1.03 times more return on investment than Dow. However, Newmont Goldcorp is 1.03 times more volatile than Dow Inc. It trades about 0.22 of its potential returns per unit of risk. Dow Inc is currently generating about -0.08 per unit of risk. If you would invest  3,762  in Newmont Goldcorp Corp on December 27, 2024 and sell it today you would earn a total of  1,077  from holding Newmont Goldcorp Corp or generate 28.63% return on investment over 90 days.

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

Newmont Goldcorp Corp  vs.  Dow Inc

Newmont Goldcorp Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 17 (%) 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.

Dow Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dow Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Newmont Goldcorp and Dow

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

The idea behind Newmont Goldcorp Corp and Dow Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.