Correlation Between Sysco and Newmont

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

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

Diversification Opportunities for Sysco and Newmont

-0.76

Correlation Coefficient

Sysco  Newmont

Pay attention - limited upside

The 3 months correlation between Sysco and Newmont is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sysco and Newmont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont and Sysco 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 Sysco 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 has no effect on the direction of Sysco i.e., Sysco and Newmont go up and down completely randomly.

Pair Corralation between Sysco and Newmont

Assuming the 90 days horizon Sysco is expected to generate 0.56 times more return on investment than Newmont. However, Sysco is 1.77 times less risky than Newmont. It trades about 0.01 of its potential returns per unit of risk. Newmont is currently generating about -0.02 per unit of risk. If you would invest  6,876  in Sysco on December 10, 2024 and sell it today you would earn a total of  34.00  from holding Sysco or generate 0.49% return on investment over 90 days.

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

Sysco  vs.  Newmont

Sysco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Newmont

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Newmont is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sysco and Newmont

The main advantage of trading using opposite Sysco and Newmont positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sysco 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 Sysco and Newmont 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.