Correlation Between Gold Fields and Pan American
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Pan American 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 Pan American 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 Pan American Silver, you can compare the effects of market volatilities on Gold Fields and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Pan American.
Diversification Opportunities for Gold Fields and Pan American
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Pan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Gold Fields i.e., Gold Fields and Pan American go up and down completely randomly.
Pair Corralation between Gold Fields and Pan American
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Pan American. In addition to that, Gold Fields is 1.17 times more volatile than Pan American Silver. It trades about -0.31 of its total potential returns per unit of risk. Pan American Silver is currently generating about -0.18 per unit of volatility. If you would invest 2,573 in Pan American Silver on August 23, 2024 and sell it today you would lose (282.00) from holding Pan American Silver or give up 10.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Pan American Silver
Performance |
| Timeline |
| Gold Fields |
| Pan American Silver |
Gold Fields and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Pan American
The main advantage of trading using opposite Gold Fields and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American'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 |
| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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