Correlation Between Anglo American and Bayhorse Silver
Can any of the company-specific risk be diversified away by investing in both Anglo American and Bayhorse Silver 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 Bayhorse Silver 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 Bayhorse Silver, you can compare the effects of market volatilities on Anglo American and Bayhorse Silver 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 Bayhorse Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Bayhorse Silver.
Diversification Opportunities for Anglo American and Bayhorse Silver
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and Bayhorse is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and Bayhorse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayhorse 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 Bayhorse Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayhorse Silver has no effect on the direction of Anglo American i.e., Anglo American and Bayhorse Silver go up and down completely randomly.
Pair Corralation between Anglo American and Bayhorse Silver
Assuming the 90 days horizon Anglo American is expected to generate 8.0 times less return on investment than Bayhorse Silver. But when comparing it to its historical volatility, Anglo American plc is 4.87 times less risky than Bayhorse Silver. It trades about 0.04 of its potential returns per unit of risk. Bayhorse Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Bayhorse Silver on November 27, 2024 and sell it today you would earn a total of 0.28 from holding Bayhorse Silver or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American plc vs. Bayhorse Silver
Performance |
| Timeline |
| Anglo American plc |
| Bayhorse Silver |
Anglo American and Bayhorse Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Bayhorse Silver
The main advantage of trading using opposite Anglo American and Bayhorse Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Bayhorse Silver 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 Bayhorse Silver will offset losses from the drop in Bayhorse Silver's long position.| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 ADR |
| Bayhorse Silver vs. Golden Lake Exploration | Bayhorse Silver vs. Transition Metals Corp | Bayhorse Silver vs. Vendetta Mining Corp | Bayhorse Silver vs. Commerce Resources Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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