Correlation Between Aggressive Growth and NEWMONT

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

By analyzing existing cross correlation between Aggressive Growth Portfolio and NEWMONT MNG P, you can compare the effects of market volatilities on Aggressive Growth and NEWMONT 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 Aggressive Growth with a short position of NEWMONT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and NEWMONT.

Diversification Opportunities for Aggressive Growth and NEWMONT

-0.65

Correlation Coefficient

Aggressive Growth  NEWMONT

Excellent diversification

The 3 months correlation between Aggressive and NEWMONT is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Portfolio and NEWMONT MNG P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT MNG P and Aggressive Growth 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 Aggressive Growth Portfolio are associated (or correlated) with NEWMONT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT MNG P has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and NEWMONT go up and down completely randomly.

Pair Corralation between Aggressive Growth and NEWMONT

Assuming the 90 days horizon Aggressive Growth Portfolio is expected to under-perform the NEWMONT. In addition to that, Aggressive Growth is 2.17 times more volatile than NEWMONT MNG P. It trades about -0.17 of its total potential returns per unit of risk. NEWMONT MNG P is currently generating about 0.26 per unit of volatility. If you would invest  9,223  in NEWMONT MNG P on September 23, 2024 and sell it today you would earn a total of  321.00  from holding NEWMONT MNG P or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Aggressive Growth Portfolio  vs.  NEWMONT MNG P

Aggressive Growth

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Growth Portfolio are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aggressive Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NEWMONT MNG P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEWMONT MNG P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NEWMONT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aggressive Growth and NEWMONT

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

The idea behind Aggressive Growth Portfolio and NEWMONT MNG P 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.