Correlation Between Gold Fields and Hammerson PLC
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Hammerson PLC 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 Fields and Hammerson PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields and Hammerson PLC, you can compare the effects of market volatilities on Gold Fields and Hammerson PLC 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 Fields with a short position of Hammerson PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Hammerson PLC.
Diversification Opportunities for Gold Fields and Hammerson PLC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Hammerson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields and Hammerson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson PLC and Gold Fields 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 Fields are associated (or correlated) with Hammerson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson PLC has no effect on the direction of Gold Fields i.e., Gold Fields and Hammerson PLC go up and down completely randomly.
Pair Corralation between Gold Fields and Hammerson PLC
Assuming the 90 days trading horizon Gold Fields is expected to under-perform the Hammerson PLC. In addition to that, Gold Fields is 2.53 times more volatile than Hammerson PLC. It trades about -0.19 of its total potential returns per unit of risk. Hammerson PLC is currently generating about -0.35 per unit of volatility. If you would invest 715,900 in Hammerson PLC on August 28, 2024 and sell it today you would lose (63,900) from holding Hammerson PLC or give up 8.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields vs. Hammerson PLC
Performance |
| Timeline |
| Gold Fields |
| Hammerson PLC |
Gold Fields and Hammerson PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Hammerson PLC
The main advantage of trading using opposite Gold Fields and Hammerson PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Hammerson PLC 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 Hammerson PLC will offset losses from the drop in Hammerson PLC's long position.| Gold Fields vs. HomeChoice Investments | Gold Fields vs. Copper 360 | Gold Fields vs. Blue Label Telecoms | Gold Fields vs. E Media Holdings |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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