Correlation Between Gold Fields and Phenom Resources
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Phenom Resources 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 Phenom Resources 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 Phenom Resources Corp, you can compare the effects of market volatilities on Gold Fields and Phenom Resources 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 Phenom Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Phenom Resources.
Diversification Opportunities for Gold Fields and Phenom Resources
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Phenom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Phenom Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phenom Resources Corp 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 Phenom Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phenom Resources Corp has no effect on the direction of Gold Fields i.e., Gold Fields and Phenom Resources go up and down completely randomly.
Pair Corralation between Gold Fields and Phenom Resources
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Phenom Resources. But the stock apears to be less risky and, when comparing its historical volatility, Gold Fields Ltd is 1.52 times less risky than Phenom Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Phenom Resources Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 26.00 in Phenom Resources Corp on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Phenom Resources Corp or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Phenom Resources Corp
Performance |
| Timeline |
| Gold Fields |
| Phenom Resources Corp |
Gold Fields and Phenom Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Phenom Resources
The main advantage of trading using opposite Gold Fields and Phenom Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Phenom Resources 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 Phenom Resources will offset losses from the drop in Phenom Resources' long position.| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
| Phenom Resources vs. Nulegacy Gold | Phenom Resources vs. Labrador Gold Corp | Phenom Resources vs. White Gold Corp | Phenom Resources vs. Getchell Gold Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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