Correlation Between Gold Terra and Newmont Goldcorp

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

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

Diversification Opportunities for Gold Terra and Newmont Goldcorp

0.03

Correlation Coefficient

Gold Terra  Newmont Goldcorp

Significant diversification

The 3 months correlation between Gold and Newmont is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gold Terra Resource 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 Gold Terra 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 Gold Terra Resource 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 Gold Terra i.e., Gold Terra and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between Gold Terra and Newmont Goldcorp

Assuming the 90 days horizon Gold Terra Resource is expected to generate 2.29 times more return on investment than Newmont Goldcorp. However, Gold Terra is 2.29 times more volatile than Newmont Goldcorp Corp. It trades about -0.01 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  3.90  in Gold Terra Resource on October 9, 2024 and sell it today you would lose (0.10) from holding Gold Terra Resource or give up 2.56% of portfolio value over 90 days.

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

Gold Terra Resource  vs.  Newmont Goldcorp Corp

Gold Terra Resource

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Terra Resource are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Gold Terra may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Gold Terra and Newmont Goldcorp

The main advantage of trading using opposite Gold Terra and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Terra 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 Gold Terra Resource 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.