Correlation Between Newmont Goldcorp and Hycroft Mining

Can any of the company-specific risk be diversified away by investing in both Newmont Goldcorp and Hycroft 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 Newmont Goldcorp and Hycroft Mining 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 Hycroft Mining Holding, you can compare the effects of market volatilities on Newmont Goldcorp and Hycroft 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 Newmont Goldcorp with a short position of Hycroft Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont Goldcorp and Hycroft Mining.

Diversification Opportunities for Newmont Goldcorp and Hycroft Mining

0.74

Correlation Coefficient

Newmont Goldcorp  Hycroft Mining

Poor diversification

The 3 months correlation between Newmont and Hycroft is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp Corp and Hycroft Mining Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hycroft Mining Holding 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 Hycroft Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hycroft Mining Holding has no effect on the direction of Newmont Goldcorp i.e., Newmont Goldcorp and Hycroft Mining go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and Hycroft Mining

Considering the 90-day investment horizon Newmont Goldcorp is expected to generate 8.91 times less return on investment than Hycroft Mining. But when comparing it to its historical volatility, Newmont Goldcorp Corp is 10.81 times less risky than Hycroft Mining. It trades about 0.19 of its potential returns per unit of risk. Hycroft Mining Holding is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.60  in Hycroft Mining Holding on December 21, 2024 and sell it today you would earn a total of  2.40  from holding Hycroft Mining Holding or generate 150.0% return on investment over 90 days.

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

Newmont Goldcorp Corp  vs.  Hycroft Mining Holding

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 15 (%) 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.

Hycroft Mining Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hycroft Mining Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal fundamental indicators, Hycroft Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmont Goldcorp and Hycroft Mining

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

The idea behind Newmont Goldcorp Corp and Hycroft Mining Holding 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.

Check out your portfolio center.

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.