Correlation Between Gold Fields and Rupert Resources
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Rupert 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 Rupert 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 Rupert Resources, you can compare the effects of market volatilities on Gold Fields and Rupert 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 Rupert Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Rupert Resources.
Diversification Opportunities for Gold Fields and Rupert Resources
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Rupert is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Rupert Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rupert Resources 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 Rupert Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rupert Resources has no effect on the direction of Gold Fields i.e., Gold Fields and Rupert Resources go up and down completely randomly.
Pair Corralation between Gold Fields and Rupert Resources
Considering the 90-day investment horizon Gold Fields is expected to generate 1.13 times less return on investment than Rupert Resources. But when comparing it to its historical volatility, Gold Fields Ltd is 1.02 times less risky than Rupert Resources. It trades about 0.01 of its potential returns per unit of risk. Rupert Resources is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 292.00 in Rupert Resources on September 4, 2024 and sell it today you would lose (7.00) from holding Rupert Resources or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Gold Fields Ltd vs. Rupert Resources
Performance |
| Timeline |
| Gold Fields |
| Rupert Resources |
Gold Fields and Rupert Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Rupert Resources
The main advantage of trading using opposite Gold Fields and Rupert Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Rupert 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 Rupert Resources will offset losses from the drop in Rupert 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 |
| Rupert Resources vs. Steppe Gold | Rupert Resources vs. Gold Bull Resources | Rupert Resources vs. Grande Portage Resources | Rupert Resources vs. Cerrado 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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