Correlation Between Gold Fields and Dundee Precious
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Dundee Precious 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 Dundee Precious 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 Dundee Precious Metals, you can compare the effects of market volatilities on Gold Fields and Dundee Precious 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 Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Dundee Precious.
Diversification Opportunities for Gold Fields and Dundee Precious
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Dundee is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals 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 Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Gold Fields i.e., Gold Fields and Dundee Precious go up and down completely randomly.
Pair Corralation between Gold Fields and Dundee Precious
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Dundee Precious. In addition to that, Gold Fields is 1.61 times more volatile than Dundee Precious Metals. It trades about -0.18 of its total potential returns per unit of risk. Dundee Precious Metals is currently generating about -0.13 per unit of volatility. If you would invest 1,006 in Dundee Precious Metals on August 27, 2024 and sell it today you would lose (54.00) from holding Dundee Precious Metals or give up 5.37% 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. Dundee Precious Metals
Performance |
| Timeline |
| Gold Fields |
| Dundee Precious Metals |
Gold Fields and Dundee Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Dundee Precious
The main advantage of trading using opposite Gold Fields and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Dundee Precious 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 Dundee Precious will offset losses from the drop in Dundee Precious' long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| Dundee Precious vs. Ascendant Resources | Dundee Precious vs. Cantex Mine Development | Dundee Precious vs. Amarc Resources | Dundee Precious vs. Sterling Metals 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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