Correlation Between Gold Fields and Headwater Gold
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Headwater Gold 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 Headwater Gold 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 Headwater Gold, you can compare the effects of market volatilities on Gold Fields and Headwater Gold 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 Headwater Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Headwater Gold.
Diversification Opportunities for Gold Fields and Headwater Gold
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Headwater is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Headwater Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Gold 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 Headwater Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Gold has no effect on the direction of Gold Fields i.e., Gold Fields and Headwater Gold go up and down completely randomly.
Pair Corralation between Gold Fields and Headwater Gold
Considering the 90-day investment horizon Gold Fields Ltd is expected to generate 0.49 times more return on investment than Headwater Gold. However, Gold Fields Ltd is 2.03 times less risky than Headwater Gold. It trades about 0.01 of its potential returns per unit of risk. Headwater Gold is currently generating about 0.0 per unit of risk. If you would invest 1,614 in Gold Fields Ltd on August 29, 2024 and sell it today you would lose (143.00) from holding Gold Fields Ltd or give up 8.86% 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. Headwater Gold
Performance |
| Timeline |
| Gold Fields |
| Headwater Gold |
Gold Fields and Headwater Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Headwater Gold
The main advantage of trading using opposite Gold Fields and Headwater Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Headwater Gold 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 Headwater Gold will offset losses from the drop in Headwater Gold's long position.The idea behind Gold Fields Ltd and Headwater Gold 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.| Headwater Gold vs. Aurion Resources | Headwater Gold vs. Liberty Gold Corp | Headwater Gold vs. Orezone Gold Corp | Headwater Gold vs. Fortuna Silver Mines |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |