Correlation Between Newmont and Gladstone Investment

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

By analyzing existing cross correlation between Newmont and Gladstone Investment, you can compare the effects of market volatilities on Newmont and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newmont and Gladstone Investment.

Diversification Opportunities for Newmont and Gladstone Investment

0.36

Correlation Coefficient

Newmont  Gladstone Investment

Weak diversification

The 3 months correlation between Newmont and Gladstone is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Newmont and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Newmont i.e., Newmont and Gladstone Investment go up and down completely randomly.

Pair Corralation between Newmont and Gladstone Investment

Assuming the 90 days trading horizon Newmont is expected to generate 1.34 times more return on investment than Gladstone Investment. However, Newmont is 1.34 times more volatile than Gladstone Investment. It trades about 0.16 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.01 per unit of risk. If you would invest  3,633  in Newmont on December 25, 2024 and sell it today you would earn a total of  739.00  from holding Newmont or generate 20.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Newmont  vs.  Gladstone Investment

Newmont

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Newmont unveiled solid returns over the last few months and may actually be approaching a breakup point.

Gladstone Investment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gladstone Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gladstone Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Newmont and Gladstone Investment

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

The idea behind Newmont and Gladstone Investment 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.