Correlation Between Tonogold Resources and Newmont Goldcorp

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

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

Diversification Opportunities for Tonogold Resources and Newmont Goldcorp

0.13

Correlation Coefficient

Tonogold Resources  Newmont Goldcorp

Average diversification

The 3 months correlation between Tonogold and Newmont is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tonogold Resources and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp and Tonogold Resources 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 Tonogold Resources are associated (or correlated) with Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of Tonogold Resources i.e., Tonogold Resources and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between Tonogold Resources and Newmont Goldcorp

Given the investment horizon of 90 days Tonogold Resources is expected to generate 7.72 times more return on investment than Newmont Goldcorp. However, Tonogold Resources is 7.72 times more volatile than Newmont Goldcorp Corp. It trades about 0.04 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.2 per unit of risk. If you would invest  1.45  in Tonogold Resources on December 20, 2024 and sell it today you would lose (0.36) from holding Tonogold Resources or give up 24.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Tonogold Resources  vs.  Newmont Goldcorp Corp

Tonogold Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tonogold Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Tonogold Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Newmont Goldcorp Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Newmont Goldcorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tonogold Resources and Newmont Goldcorp

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

The idea behind Tonogold Resources and Newmont Goldcorp Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.