Correlation Between Primo Brands and NEWMONT

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

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

Diversification Opportunities for Primo Brands and NEWMONT

0.27

Correlation Coefficient

Primo Brands  NEWMONT

Modest diversification

The 3 months correlation between Primo and NEWMONT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands 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 Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and NEWMONT go up and down completely randomly.

Pair Corralation between Primo Brands and NEWMONT

Given the investment horizon of 90 days Primo Brands is expected to generate 1.67 times more return on investment than NEWMONT. However, Primo Brands is 1.67 times more volatile than NEWMONT MNG P. It trades about 0.05 of its potential returns per unit of risk. NEWMONT MNG P is currently generating about -0.06 per unit of risk. If you would invest  3,103  in Primo Brands on December 24, 2024 and sell it today you would earn a total of  126.00  from holding Primo Brands or generate 4.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.61%
Values	Daily Returns

Primo Brands  vs.  NEWMONT MNG P

Primo Brands

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Primo Brands is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

NEWMONT MNG P

Risk-Adjusted Performance

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Primo Brands and NEWMONT

The main advantage of trading using opposite Primo Brands and NEWMONT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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 Primo Brands 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.