Correlation Between Newmont and AGF Management

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

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

Diversification Opportunities for Newmont and AGF Management

0.17

Correlation Coefficient

Newmont  AGF Management

Average diversification

The 3 months correlation between Newmont and AGF is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management and Newmont 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 are associated (or correlated) with AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Newmont i.e., Newmont and AGF Management go up and down completely randomly.

Pair Corralation between Newmont and AGF Management

Assuming the 90 days horizon Newmont is expected to generate 0.97 times more return on investment than AGF Management. However, Newmont is 1.03 times less risky than AGF Management. It trades about 0.18 of its potential returns per unit of risk. AGF Management Limited is currently generating about -0.06 per unit of risk. If you would invest  3,578  in Newmont on December 21, 2024 and sell it today you would earn a total of  817.00  from holding Newmont or generate 22.83% return on investment over 90 days.

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

Newmont  vs.  AGF Management Limited

Newmont

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Newmont reported solid returns over the last few months and may actually be approaching a breakup point.

AGF Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGF Management Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Newmont and AGF Management

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

The idea behind Newmont and AGF Management Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.