Correlation Between Gold Fields and Friedman Industries
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Friedman Industries 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 Friedman Industries 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 Friedman Industries, you can compare the effects of market volatilities on Gold Fields and Friedman Industries 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 Friedman Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Friedman Industries.
Diversification Opportunities for Gold Fields and Friedman Industries
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Gold and Friedman is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Friedman Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Friedman Industries 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 Friedman Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Friedman Industries has no effect on the direction of Gold Fields i.e., Gold Fields and Friedman Industries go up and down completely randomly.
Pair Corralation between Gold Fields and Friedman Industries
Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 1.04 times more return on investment than Friedman Industries. However, Gold Fields is 1.04 times more volatile than Friedman Industries. It trades about 0.63 of its potential returns per unit of risk. Friedman Industries is currently generating about -0.2 per unit of risk. If you would invest 1,320 in Gold Fields Ltd on November 1, 2024 and sell it today you would earn a total of 408.00 from holding Gold Fields Ltd or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Friedman Industries
Performance |
| Timeline |
| Gold Fields |
| Friedman Industries |
Gold Fields and Friedman Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Friedman Industries
The main advantage of trading using opposite Gold Fields and Friedman Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Friedman Industries 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 Friedman Industries will offset losses from the drop in Friedman Industries' long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| Friedman Industries vs. ArcelorMittal SA | Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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