Correlation Between Monarca Minerals and Newport Gold

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

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

Diversification Opportunities for Monarca Minerals and Newport Gold

0.27

Correlation Coefficient

Monarca Minerals  Newport Gold

Modest diversification

The 3 months correlation between Monarca and Newport is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Monarca Minerals and Newport Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Gold and Monarca Minerals 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 Monarca Minerals are associated (or correlated) with Newport Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Gold has no effect on the direction of Monarca Minerals i.e., Monarca Minerals and Newport Gold go up and down completely randomly.

Pair Corralation between Monarca Minerals and Newport Gold

Assuming the 90 days horizon Monarca Minerals is expected to generate 2.08 times more return on investment than Newport Gold. However, Monarca Minerals is 2.08 times more volatile than Newport Gold. It trades about 0.15 of its potential returns per unit of risk. Newport Gold is currently generating about 0.12 per unit of risk. If you would invest  0.35  in Monarca Minerals on December 29, 2024 and sell it today you would earn a total of  0.37  from holding Monarca Minerals or generate 105.71% return on investment over 90 days.

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

Monarca Minerals  vs.  Newport Gold

Monarca Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monarca Minerals are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Monarca Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Newport Gold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newport Gold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newport Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monarca Minerals and Newport Gold

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

The idea behind Monarca Minerals and Newport Gold 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.