Correlation Between Gold Fields and Big Ridge
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Big Ridge 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 Big Ridge 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 Big Ridge Gold, you can compare the effects of market volatilities on Gold Fields and Big Ridge 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 Big Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Big Ridge.
Diversification Opportunities for Gold Fields and Big Ridge
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Big is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Big Ridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Ridge Gold 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 Big Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Ridge Gold has no effect on the direction of Gold Fields i.e., Gold Fields and Big Ridge go up and down completely randomly.
Pair Corralation between Gold Fields and Big Ridge
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Big Ridge. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 2.14 times less risky than Big Ridge. The stock trades about 0.0 of its potential returns per unit of risk. The Big Ridge Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Big Ridge Gold on August 25, 2024 and sell it today you would earn a total of 0.80 from holding Big Ridge Gold or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Big Ridge Gold
Performance |
| Timeline |
| Gold Fields |
| Big Ridge Gold |
Gold Fields and Big Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Big Ridge
The main advantage of trading using opposite Gold Fields and Big Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Big Ridge 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 Big Ridge will offset losses from the drop in Big Ridge'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 |
| Big Ridge vs. Minnova Corp | Big Ridge vs. Argo Gold | Big Ridge vs. Advance Gold Corp | Big Ridge vs. Blue Star Gold |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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