Correlation Between Anglo American and Warpaint London
Can any of the company-specific risk be diversified away by investing in both Anglo American and Warpaint London 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 Warpaint London 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 Warpaint London PLC, you can compare the effects of market volatilities on Anglo American and Warpaint London 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 Warpaint London. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Warpaint London.
Diversification Opportunities for Anglo American and Warpaint London
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anglo and Warpaint is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Warpaint London PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warpaint London PLC 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 Warpaint London. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warpaint London PLC has no effect on the direction of Anglo American i.e., Anglo American and Warpaint London go up and down completely randomly.
Pair Corralation between Anglo American and Warpaint London
Assuming the 90 days trading horizon Anglo American is expected to generate 2.74 times less return on investment than Warpaint London. In addition to that, Anglo American is 1.04 times more volatile than Warpaint London PLC. It trades about 0.03 of its total potential returns per unit of risk. Warpaint London PLC is currently generating about 0.08 per unit of volatility. If you would invest 32,450 in Warpaint London PLC on September 14, 2024 and sell it today you would earn a total of 20,550 from holding Warpaint London PLC or generate 63.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Anglo American PLC vs. Warpaint London PLC
Performance |
| Timeline |
| Anglo American PLC |
| Warpaint London PLC |
Anglo American and Warpaint London Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Warpaint London
The main advantage of trading using opposite Anglo American and Warpaint London positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Warpaint London 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 Warpaint London will offset losses from the drop in Warpaint London's long position.| Anglo American vs. Givaudan SA | Anglo American vs. Antofagasta PLC | Anglo American vs. Ferrexpo PLC | Anglo American vs. Atalaya Mining |
| Warpaint London vs. Anglo American PLC | Warpaint London vs. Vodafone Group PLC | Warpaint London vs. Unilever PLC | Warpaint London vs. Centrica 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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