Correlation Between Gold Fields and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Gold Fields and Unilever PLC 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 Unilever PLC 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 Unilever PLC ADR, you can compare the effects of market volatilities on Gold Fields and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and Unilever PLC.
Diversification Opportunities for Gold Fields and Unilever PLC
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gold and Unilever is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Gold Fields i.e., Gold Fields and Unilever PLC go up and down completely randomly.
Pair Corralation between Gold Fields and Unilever PLC
Considering the 90-day investment horizon Gold Fields Ltd is expected to under-perform the Unilever PLC. In addition to that, Gold Fields is 2.76 times more volatile than Unilever PLC ADR. It trades about -0.23 of its total potential returns per unit of risk. Unilever PLC ADR is currently generating about -0.23 per unit of volatility. If you would invest 6,204 in Unilever PLC ADR on August 28, 2024 and sell it today you would lose (326.00) from holding Unilever PLC ADR or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. Unilever PLC ADR
Performance |
| Timeline |
| Gold Fields |
| Unilever PLC ADR |
Gold Fields and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and Unilever PLC
The main advantage of trading using opposite Gold Fields and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC'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 |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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