Correlation Between Marlin and Gold Fields

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

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

Diversification Opportunities for Marlin and Gold Fields

0.35

Correlation Coefficient

Marlin  Gold Fields

Weak diversification

The 3 months correlation between Marlin and Gold is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Marlin and Goldfinch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Marlin 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 Marlin 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 Marlin i.e., Marlin and Gold Fields go up and down completely randomly.

Pair Corralation between Marlin and Gold Fields

Assuming the 90 days trading horizon Marlin is expected to under-perform the Gold Fields. But the crypto coin apears to be less risky and, when comparing its historical volatility, Marlin is 1.22 times less risky than Gold Fields. The crypto coin trades about -0.26 of its potential returns per unit of risk. The Goldfinch is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  387.00  in Goldfinch on January 29, 2024 and sell it today you would lose (63.00) from holding Goldfinch or give up 16.28% of portfolio value over 90 days.

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

Marlin  vs.  Goldfinch

Marlin

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marlin are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Marlin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gold Fields

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Marlin and Gold Fields

The main advantage of trading using opposite Marlin and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marlin 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 Marlin and Goldfinch 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.