Correlation Between TRU Precious and Newmont Goldcorp

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

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

Diversification Opportunities for TRU Precious and Newmont Goldcorp

0.39

Correlation Coefficient

TRU Precious  Newmont Goldcorp

Weak diversification

The 3 months correlation between TRU and Newmont is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TRU Precious Metals 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 TRU Precious 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 TRU Precious Metals 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 TRU Precious i.e., TRU Precious and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between TRU Precious and Newmont Goldcorp

Assuming the 90 days horizon TRU Precious Metals is expected to generate 6.44 times more return on investment than Newmont Goldcorp. However, TRU Precious is 6.44 times more volatile than Newmont Goldcorp Corp. It trades about 0.0 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about -0.25 per unit of risk. If you would invest  1.19  in TRU Precious Metals on October 9, 2024 and sell it today you would lose (0.17) from holding TRU Precious Metals or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

TRU Precious Metals  vs.  Newmont Goldcorp Corp

TRU Precious Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TRU Precious Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, TRU Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Newmont Goldcorp Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont Goldcorp Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with TRU Precious and Newmont Goldcorp

The main advantage of trading using opposite TRU Precious and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRU Precious 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 TRU Precious Metals 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.