Correlation Between Gold Fields and New Found

Can any of the company-specific risk be diversified away by investing in both Gold Fields and New Found 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 New Found 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 New Found Gold, you can compare the effects of market volatilities on Gold Fields and New Found 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 New Found. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and New Found.

Diversification Opportunities for Gold Fields and New Found

0.73

Correlation Coefficient

Gold Fields  New Found

Poor diversification

The 3 months correlation between Gold and New is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and New Found Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Found Gold 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 New Found. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Found Gold has no effect on the direction of Gold Fields i.e., Gold Fields and New Found go up and down completely randomly.

Pair Corralation between Gold Fields and New Found

Considering the 90-day investment horizon Gold Fields is expected to generate 1.14 times less return on investment than New Found. But when comparing it to its historical volatility, Gold Fields Ltd is 1.28 times less risky than New Found. It trades about 0.15 of its potential returns per unit of risk. New Found Gold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  120.00  in New Found Gold on May 7, 2025 and sell it today you would earn a total of  41.00  from holding New Found Gold or generate 34.17% return on investment over 90 days.

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

Gold Fields Ltd  vs.  New Found Gold

Gold Fields

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields Ltd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gold Fields demonstrated solid returns over the last few months and may actually be approaching a breakup point.

New Found Gold

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in New Found Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, New Found exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Fields and New Found

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

The idea behind Gold Fields Ltd and New Found Gold 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.