Correlation Between Gold Fields and Soma Gold
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Soma 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 Soma 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 Soma Gold Corp, you can compare the effects of market volatilities on Gold Fields and Soma 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 Soma Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Soma Gold.
Diversification Opportunities for Gold Fields and Soma Gold
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Soma is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Soma Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soma Gold 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 Soma Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soma Gold Corp has no effect on the direction of Gold Fields i.e., Gold Fields and Soma Gold go up and down completely randomly.
Pair Corralation between Gold Fields and Soma Gold
Considering the 90-day investment horizon Gold Fields is expected to generate 2.09 times less return on investment than Soma Gold. But when comparing it to its historical volatility, Gold Fields Ltd is 1.39 times less risky than Soma Gold. It trades about 0.04 of its potential returns per unit of risk. Soma Gold Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Soma Gold Corp on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Soma Gold Corp or generate 110.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Gold Fields Ltd vs. Soma Gold Corp
Performance |
| Timeline |
| Gold Fields |
| Soma Gold Corp |
Gold Fields and Soma Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Soma Gold
The main advantage of trading using opposite Gold Fields and Soma Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Soma 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 Soma Gold will offset losses from the drop in Soma 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 |
| Soma Gold vs. Harmony Gold Mining | Soma Gold vs. SPACE | Soma Gold vs. T Rowe Price | Soma Gold vs. Ampleforth |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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