Correlation Between EnCore Energy and Gold Fields
Can any of the company-specific risk be diversified away by investing in both EnCore Energy 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 EnCore Energy and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between enCore Energy Corp and Gold Fields Ltd, you can compare the effects of market volatilities on EnCore Energy 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 EnCore Energy with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnCore Energy and Gold Fields.
Diversification Opportunities for EnCore Energy and Gold Fields
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EnCore and Gold is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding enCore Energy Corp and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and EnCore Energy 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 enCore Energy Corp 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 EnCore Energy i.e., EnCore Energy and Gold Fields go up and down completely randomly.
Pair Corralation between EnCore Energy and Gold Fields
Allowing for the 90-day total investment horizon EnCore Energy is expected to generate 1.18 times less return on investment than Gold Fields. In addition to that, EnCore Energy is 1.07 times more volatile than Gold Fields Ltd. It trades about 0.01 of its total potential returns per unit of risk. Gold Fields Ltd is currently generating about 0.02 per unit of volatility. If you would invest 1,489 in Gold Fields Ltd on August 26, 2024 and sell it today you would earn a total of 35.00 from holding Gold Fields Ltd or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
enCore Energy Corp vs. Gold Fields Ltd
Performance |
| Timeline |
| enCore Energy Corp |
| Gold Fields |
EnCore Energy and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EnCore Energy and Gold Fields
The main advantage of trading using opposite EnCore Energy and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnCore Energy 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.| EnCore Energy vs. Cameco Corp | EnCore Energy vs. Denison Mines Corp | EnCore Energy vs. Centrus Energy | EnCore Energy vs. NexGen Energy |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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