Correlation Between Dundee Precious and Gold Fields
Can any of the company-specific risk be diversified away by investing in both Dundee Precious 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 Dundee Precious and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dundee Precious Metals and Gold Fields Ltd, you can compare the effects of market volatilities on Dundee Precious 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 Dundee Precious with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dundee Precious and Gold Fields.
Diversification Opportunities for Dundee Precious and Gold Fields
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dundee and Gold is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dundee Precious Metals and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Dundee 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 Dundee Precious Metals 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 Dundee Precious i.e., Dundee Precious and Gold Fields go up and down completely randomly.
Pair Corralation between Dundee Precious and Gold Fields
Assuming the 90 days horizon Dundee Precious is expected to generate 1.35 times less return on investment than Gold Fields. But when comparing it to its historical volatility, Dundee Precious Metals is 1.43 times less risky than Gold Fields. It trades about 0.1 of its potential returns per unit of risk. Gold Fields Ltd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,558 in Gold Fields Ltd on November 23, 2024 and sell it today you would earn a total of 362.00 from holding Gold Fields Ltd or generate 23.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dundee Precious Metals vs. Gold Fields Ltd
Performance |
Timeline |
Dundee Precious Metals |
Gold Fields |
Dundee Precious and Gold Fields Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dundee Precious and Gold Fields
The main advantage of trading using opposite Dundee Precious and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dundee Precious 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.Dundee Precious vs. Hummingbird Resources PLC | ||
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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