Correlation Between Old Mutual and Gold Fields

Can any of the company-specific risk be diversified away by investing in both Old Mutual and Gold Fields 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 Old Mutual and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Old Mutual and Gold Fields, you can compare the effects of market volatilities on Old Mutual and Gold Fields 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 Old Mutual with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Gold Fields.

Diversification Opportunities for Old Mutual and Gold Fields

0.0

Correlation Coefficient

Old Mutual  Gold Fields

Pay attention - limited upside

The 3 months correlation between Old and Gold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Old Mutual 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 Old Mutual are associated (or correlated) with Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Old Mutual i.e., Old Mutual and Gold Fields go up and down completely randomly.

Pair Corralation between Old Mutual and Gold Fields

If you would invest  2,460,673  in Gold Fields on December 27, 2024 and sell it today you would earn a total of  1,309,327  from holding Gold Fields or generate 53.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Old Mutual  vs.  Gold Fields

Old Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days Old Mutual has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Old Mutual is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Gold Fields

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Gold Fields exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Old Mutual and Gold Fields

The main advantage of trading using opposite Old Mutual and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' long position.

The idea behind Old Mutual and Gold Fields 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.