Correlation Between Gold Fields and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on Gold Fields and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Globalfoundries.
Diversification Opportunities for Gold Fields and Globalfoundries
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gold and Globalfoundries is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Gold Fields i.e., Gold Fields and Globalfoundries go up and down completely randomly.
Pair Corralation between Gold Fields and Globalfoundries
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Globalfoundries. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.68 times less risky than Globalfoundries. The stock trades about -0.23 of its potential returns per unit of risk. The Globalfoundries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,024 in Globalfoundries on August 28, 2024 and sell it today you would earn a total of 471.00 from holding Globalfoundries or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Globalfoundries
Performance |
| Timeline |
| Gold Fields |
| Globalfoundries |
Gold Fields and Globalfoundries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Globalfoundries
The main advantage of trading using opposite Gold Fields and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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