Correlation Between Newmont Goldcorp and Orogen Royalties

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

Diversification Opportunities for Newmont Goldcorp and Orogen Royalties

0.72

Correlation Coefficient

Newmont Goldcorp  Orogen Royalties

Poor diversification

The 3 months correlation between Newmont and Orogen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Newmont Goldcorp Corp and Orogen Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orogen Royalties 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 Orogen Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orogen Royalties has no effect on the direction of Newmont Goldcorp i.e., Newmont Goldcorp and Orogen Royalties go up and down completely randomly.

Pair Corralation between Newmont Goldcorp and Orogen Royalties

Considering the 90-day investment horizon Newmont Goldcorp Corp is expected to generate 0.93 times more return on investment than Orogen Royalties. However, Newmont Goldcorp Corp is 1.08 times less risky than Orogen Royalties. It trades about 0.21 of its potential returns per unit of risk. Orogen Royalties is currently generating about 0.15 per unit of risk. If you would invest  3,805  in Newmont Goldcorp Corp on December 20, 2024 and sell it today you would earn a total of  994.00  from holding Newmont Goldcorp Corp or generate 26.12% 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.  Orogen Royalties

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 16 (%) 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.

Orogen Royalties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Orogen Royalties are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Orogen Royalties reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newmont Goldcorp and Orogen Royalties

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

The idea behind Newmont Goldcorp Corp and Orogen Royalties 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.