Correlation Between Sibanye Stillwater and Gold Fields

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

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

Diversification Opportunities for Sibanye Stillwater and Gold Fields

0.61

Correlation Coefficient

Sibanye Stillwater  Gold Fields

Poor diversification

The 3 months correlation between Sibanye and Gold is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sibanye Stillwater and Gold Fields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Sibanye Stillwater 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 Stillwater 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 Sibanye Stillwater i.e., Sibanye Stillwater and Gold Fields go up and down completely randomly.

Pair Corralation between Sibanye Stillwater and Gold Fields

Assuming the 90 days trading horizon Sibanye Stillwater is expected to generate 1.79 times less return on investment than Gold Fields. In addition to that, Sibanye Stillwater is 1.28 times more volatile than Gold Fields. It trades about 0.15 of its total potential returns per unit of risk. Gold Fields is currently generating about 0.33 per unit of volatility. If you would invest  2,434,279  in Gold Fields on December 30, 2024 and sell it today you would earn a total of  1,655,621  from holding Gold Fields or generate 68.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sibanye Stillwater  vs.  Gold Fields

Sibanye Stillwater

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sibanye Stillwater are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sibanye Stillwater exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gold Fields

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields are ranked lower than 26 (%) 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 Sibanye Stillwater and Gold Fields

The main advantage of trading using opposite Sibanye Stillwater and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sibanye Stillwater 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 Sibanye Stillwater 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.