Correlation Between Gold Fields and Arm Holdings
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Arm Holdings 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 Arm Holdings 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 Arm Holdings plc, you can compare the effects of market volatilities on Gold Fields and Arm Holdings 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 Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Arm Holdings.
Diversification Opportunities for Gold Fields and Arm Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Arm is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings 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 Ltd are associated (or correlated) with Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Gold Fields i.e., Gold Fields and Arm Holdings go up and down completely randomly.
Pair Corralation between Gold Fields and Arm Holdings
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Arm Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.13 times less risky than Arm Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The Arm Holdings plc is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 14,241 in Arm Holdings plc on August 24, 2024 and sell it today you would lose (927.00) from holding Arm Holdings plc or give up 6.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Arm Holdings plc
Performance |
| Timeline |
| Gold Fields |
| Arm Holdings plc |
Gold Fields and Arm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Arm Holdings
The main advantage of trading using opposite Gold Fields and Arm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Arm Holdings 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 Arm Holdings will offset losses from the drop in Arm Holdings' long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| Arm Holdings vs. Eshallgo Class A | Arm Holdings vs. Amtech Systems | Arm Holdings vs. Gold Fields Ltd | Arm Holdings vs. Aegean Airlines SA |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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