Correlation Between Capitec Bank and Gold Fields
Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Gold Fields 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 Capitec Bank and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capitec Bank Holdings and Gold Fields, you can compare the effects of market volatilities on Capitec Bank and Gold Fields 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 Capitec Bank with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Gold Fields.
Diversification Opportunities for Capitec Bank and Gold Fields
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capitec and Gold is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Capitec Bank 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 Capitec Bank Holdings are associated (or correlated) with Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Capitec Bank i.e., Capitec Bank and Gold Fields go up and down completely randomly.
Pair Corralation between Capitec Bank and Gold Fields
Assuming the 90 days trading horizon Capitec Bank is expected to generate 12.25 times less return on investment than Gold Fields. But when comparing it to its historical volatility, Capitec Bank Holdings is 1.46 times less risky than Gold Fields. It trades about 0.07 of its potential returns per unit of risk. Gold Fields is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest 2,693,800 in Gold Fields on November 9, 2024 and sell it today you would earn a total of 752,800 from holding Gold Fields or generate 27.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capitec Bank Holdings vs. Gold Fields
Performance |
| Timeline |
| Capitec Bank Holdings |
| Gold Fields |
Capitec Bank and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capitec Bank and Gold Fields
The main advantage of trading using opposite Capitec Bank and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capitec Bank position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' long position.| Capitec Bank vs. Bytes Technology | Capitec Bank vs. Deneb Investments | Capitec Bank vs. Reinet Investments SCA | Capitec Bank vs. Hosken Consolidated Investments |
| Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Astral Foods | Gold Fields vs. ABSA Bank Limited | Gold Fields vs. City Lodge Hotels |
Check out your portfolio center.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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