Correlation Between Gold Fields and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Illinois Tool 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 Illinois Tool 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 Illinois Tool Works, you can compare the effects of market volatilities on Gold Fields and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Illinois Tool.
Diversification Opportunities for Gold Fields and Illinois Tool
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gold and Illinois is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of Gold Fields i.e., Gold Fields and Illinois Tool go up and down completely randomly.
Pair Corralation between Gold Fields and Illinois Tool
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Illinois Tool. In addition to that, Gold Fields is 2.74 times more volatile than Illinois Tool Works. It trades about 0.0 of its total potential returns per unit of risk. Illinois Tool Works is currently generating about 0.11 per unit of volatility. If you would invest 23,467 in Illinois Tool Works on August 24, 2024 and sell it today you would earn a total of 3,518 from holding Illinois Tool Works or generate 14.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Illinois Tool Works
Performance |
| Timeline |
| Gold Fields |
| Illinois Tool Works |
Gold Fields and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Illinois Tool
The main advantage of trading using opposite Gold Fields and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Pan American Silver | Gold Fields vs. Kinross Gold | Gold Fields vs. B2Gold Corp |
| Illinois Tool vs. Small Cap Core | Illinois Tool vs. Freedom Holding Corp | Illinois Tool vs. Gfl Environmental Holdings | Illinois Tool vs. Growth Fund Of |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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