Correlation Between Gold Fields and New Gold
Can any of the company-specific risk be diversified away by investing in both Gold Fields and New 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 New 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 New Gold, you can compare the effects of market volatilities on Gold Fields and New 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 New Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and New Gold.
Diversification Opportunities for Gold Fields and New Gold
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and New is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and New Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New 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 New Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Gold has no effect on the direction of Gold Fields i.e., Gold Fields and New Gold go up and down completely randomly.
Pair Corralation between Gold Fields and New Gold
Considering the 90-day investment horizon Gold Fields is expected to generate 1.98 times less return on investment than New Gold. But when comparing it to its historical volatility, Gold Fields Ltd is 1.18 times less risky than New Gold. It trades about 0.04 of its potential returns per unit of risk. New Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 115.00 in New Gold on August 24, 2024 and sell it today you would earn a total of 173.00 from holding New Gold or generate 150.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. New Gold
Performance |
| Timeline |
| Gold Fields |
| New Gold |
Gold Fields and New Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and New Gold
The main advantage of trading using opposite Gold Fields and New Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, New 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 New Gold will offset losses from the drop in New Gold's long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| New Gold vs. Eldorado Gold Corp | New Gold vs. Kinross Gold | New Gold vs. Harmony Gold Mining | New Gold vs. Coeur Mining |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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