Correlation Between Gold Fields and American Manganese
Can any of the company-specific risk be diversified away by investing in both Gold Fields and American Manganese 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 American Manganese 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 American Manganese, you can compare the effects of market volatilities on Gold Fields and American Manganese 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 American Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and American Manganese.
Diversification Opportunities for Gold Fields and American Manganese
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and American is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and American Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Manganese 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 American Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Manganese has no effect on the direction of Gold Fields i.e., Gold Fields and American Manganese go up and down completely randomly.
Pair Corralation between Gold Fields and American Manganese
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the American Manganese. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 2.57 times less risky than American Manganese. The stock trades about -0.2 of its potential returns per unit of risk. The American Manganese is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 6.40 in American Manganese on August 26, 2024 and sell it today you would earn a total of 2.20 from holding American Manganese or generate 34.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. American Manganese
Performance |
| Timeline |
| Gold Fields |
| American Manganese |
Gold Fields and American Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and American Manganese
The main advantage of trading using opposite Gold Fields and American Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, American Manganese 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 American Manganese will offset losses from the drop in American Manganese's long position.The idea behind Gold Fields Ltd and American Manganese 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.| American Manganese vs. Graphano Energy | American Manganese vs. Generation Mining Limited | American Manganese vs. Northern Graphite | American Manganese vs. Western Resources Corp |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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