Correlation Between EM and Gold Fields
Can any of the company-specific risk be diversified away by investing in both EM 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 EM and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EM and Goldfinch, you can compare the effects of market volatilities on EM 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 EM with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of EM and Gold Fields.
Diversification Opportunities for EM and Gold Fields
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EM and Gold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EM and Goldfinch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and EM 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 EM 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 EM i.e., EM and Gold Fields go up and down completely randomly.
Pair Corralation between EM and Gold Fields
If you would invest 0.01 in EM on August 24, 2024 and sell it today you would earn a total of 0.00 from holding EM or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EM vs. Goldfinch
Performance |
| Timeline |
| EM |
| Gold Fields |
EM and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EM and Gold Fields
The main advantage of trading using opposite EM and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EM 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.The idea behind EM and Goldfinch 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.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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