Correlation Between Gold Fields and Seabridge Gold

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

Diversification Opportunities for Gold Fields and Seabridge Gold

-0.09

Correlation Coefficient

Gold Fields  Seabridge Gold

Good diversification

The 3 months correlation between Gold and Seabridge is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge 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 Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Gold Fields i.e., Gold Fields and Seabridge Gold go up and down completely randomly.

Pair Corralation between Gold Fields and Seabridge Gold

Considering the 90-day investment horizon Gold Fields is expected to generate 2.23 times less return on investment than Seabridge Gold. But when comparing it to its historical volatility, Gold Fields Ltd is 1.02 times less risky than Seabridge Gold. It trades about 0.08 of its potential returns per unit of risk. Seabridge Gold is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Seabridge Gold on July 23, 2024 and sell it today you would earn a total of  476.00  from holding Seabridge Gold or generate 32.6% return on investment over 90 days.

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

Gold Fields Ltd  vs.  Seabridge Gold

Gold Fields

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Fields Ltd are ranked lower than 6 (%) 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.

Seabridge Gold

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Seabridge Gold are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Seabridge Gold sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Fields and Seabridge Gold

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

The idea behind Gold Fields Ltd and Seabridge 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.