Correlation Between Sibanye Gold and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both Sibanye Gold and Impala Platinum 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 Sibanye Gold and Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sibanye Gold Ltd and Impala Platinum Holdings, you can compare the effects of market volatilities on Sibanye Gold and Impala Platinum 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 Sibanye Gold with a short position of Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sibanye Gold and Impala Platinum.
Diversification Opportunities for Sibanye Gold and Impala Platinum
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sibanye and Impala is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Gold Ltd and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings and Sibanye Gold 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 Sibanye Gold Ltd are associated (or correlated) with Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Sibanye Gold i.e., Sibanye Gold and Impala Platinum go up and down completely randomly.
Pair Corralation between Sibanye Gold and Impala Platinum
Given the investment horizon of 90 days Sibanye Gold Ltd is expected to under-perform the Impala Platinum. In addition to that, Sibanye Gold is 1.07 times more volatile than Impala Platinum Holdings. It trades about -0.02 of its total potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.05 per unit of volatility. If you would invest 509.00 in Impala Platinum Holdings on August 29, 2024 and sell it today you would earn a total of 81.00 from holding Impala Platinum Holdings or generate 15.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sibanye Gold Ltd vs. Impala Platinum Holdings
Performance |
| Timeline |
| Sibanye Gold |
| Impala Platinum Holdings |
Sibanye Gold and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sibanye Gold and Impala Platinum
The main advantage of trading using opposite Sibanye Gold and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Gold position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum's long position.| Sibanye Gold vs. AngloGold Ashanti plc | Sibanye Gold vs. Harmony Gold Mining | Sibanye Gold vs. Eldorado Gold Corp | Sibanye Gold vs. Kinross Gold |
| Impala Platinum vs. Anglo American Platinum | Impala Platinum vs. Sibanye Gold Ltd | Impala Platinum vs. Anglo American PLC | Impala Platinum vs. Fortescue Metals Group |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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