Correlation Between Gold Fields and First Majestic
Can any of the company-specific risk be diversified away by investing in both Gold Fields and First Majestic 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 First Majestic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and First Majestic Silver, you can compare the effects of market volatilities on Gold Fields and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and First Majestic.
Diversification Opportunities for Gold Fields and First Majestic
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 Ltd are associated (or correlated) with First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of Gold Fields i.e., Gold Fields and First Majestic go up and down completely randomly.
Pair Corralation between Gold Fields and First Majestic
Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 1.14 times more return on investment than First Majestic. However, Gold Fields is 1.14 times more volatile than First Majestic Silver. It trades about -0.23 of its potential returns per unit of risk. First Majestic Silver is currently generating about -0.41 per unit of risk. If you would invest 1,714 in Gold Fields Ltd on August 30, 2024 and sell it today you would lose (258.00) from holding Gold Fields Ltd or give up 15.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Gold Fields Ltd vs. First Majestic Silver
Performance |
| Timeline |
| Gold Fields |
| First Majestic Silver |
Gold Fields and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and First Majestic
The main advantage of trading using opposite Gold Fields and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| First Majestic vs. Aya Gold Silver | First Majestic vs. Discovery Metals Corp | First Majestic vs. Reyna Silver Corp | First Majestic vs. Andean Precious Metals |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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