Correlation Between Anglo American and Dolly Varden
Can any of the company-specific risk be diversified away by investing in both Anglo American and Dolly Varden 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 Anglo American and Dolly Varden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American PLC and Dolly Varden Silver, you can compare the effects of market volatilities on Anglo American and Dolly Varden 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 Anglo American with a short position of Dolly Varden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Dolly Varden.
Diversification Opportunities for Anglo American and Dolly Varden
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Anglo and Dolly is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Dolly Varden Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolly Varden Silver and Anglo American 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 Anglo American PLC are associated (or correlated) with Dolly Varden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolly Varden Silver has no effect on the direction of Anglo American i.e., Anglo American and Dolly Varden go up and down completely randomly.
Pair Corralation between Anglo American and Dolly Varden
Assuming the 90 days trading horizon Anglo American PLC is expected to generate 0.48 times more return on investment than Dolly Varden. However, Anglo American PLC is 2.07 times less risky than Dolly Varden. It trades about 0.11 of its potential returns per unit of risk. Dolly Varden Silver is currently generating about -0.25 per unit of risk. If you would invest 240,000 in Anglo American PLC on September 1, 2024 and sell it today you would earn a total of 12,050 from holding Anglo American PLC or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 52.17% |
| Values | Daily Returns |
Anglo American PLC vs. Dolly Varden Silver
Performance |
| Timeline |
| Anglo American PLC |
| Dolly Varden Silver |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Anglo American and Dolly Varden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Dolly Varden
The main advantage of trading using opposite Anglo American and Dolly Varden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Dolly Varden 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 Dolly Varden will offset losses from the drop in Dolly Varden's long position.| Anglo American vs. Dalata Hotel Group | Anglo American vs. Melia Hotels | Anglo American vs. Metals Exploration Plc | Anglo American vs. Cars Inc |
| Dolly Varden vs. PPHE Hotel Group | Dolly Varden vs. Infrastrutture Wireless Italiane | Dolly Varden vs. Trainline Plc | Dolly Varden vs. Gear4music Plc |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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