Correlation Between New World and Mining Global

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

By analyzing existing cross correlation between New World Gold and Mining Global, you can compare the effects of market volatilities on New World and Mining Global 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 New World with a short position of Mining Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Mining Global.

Diversification Opportunities for New World and Mining Global

0.02

Correlation Coefficient

New World  Mining Global

Significant diversification

The 3 months correlation between New and Mining is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding New World Gold and Mining Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mining Global and New World 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 New World Gold are associated (or correlated) with Mining Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mining Global has no effect on the direction of New World i.e., New World and Mining Global go up and down completely randomly.

Pair Corralation between New World and Mining Global

If you would invest  0.01  in New World Gold on December 27, 2024 and sell it today you would earn a total of  0.00  from holding New World Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

New World Gold  vs.  Mining Global

New World Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New World Gold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mining Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mining Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mining Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with New World and Mining Global

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

The idea behind New World Gold and Mining Global 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..