Correlation Between Gold Fields and Spring Valley
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Spring Valley 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 Spring Valley 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 Spring Valley Acquisition, you can compare the effects of market volatilities on Gold Fields and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Spring Valley.
Diversification Opportunities for Gold Fields and Spring Valley
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gold and Spring is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Gold Fields i.e., Gold Fields and Spring Valley go up and down completely randomly.
Pair Corralation between Gold Fields and Spring Valley
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Spring Valley. In addition to that, Gold Fields is 3.66 times more volatile than Spring Valley Acquisition. It trades about -0.2 of its total potential returns per unit of risk. Spring Valley Acquisition is currently generating about -0.07 per unit of volatility. If you would invest 1,137 in Spring Valley Acquisition on August 26, 2024 and sell it today you would lose (14.00) from holding Spring Valley Acquisition or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Spring Valley Acquisition
Performance |
| Timeline |
| Gold Fields |
| Spring Valley Acquisition |
Gold Fields and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Spring Valley
The main advantage of trading using opposite Gold Fields and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley's long position.The idea behind Gold Fields Ltd and Spring Valley Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 CEOs Directory module to screen CEOs from public companies around the world.
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