Correlation Between Anglo American and Commander Resources
Can any of the company-specific risk be diversified away by investing in both Anglo American and Commander Resources 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 Commander Resources 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 Commander Resources, you can compare the effects of market volatilities on Anglo American and Commander Resources 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 Commander Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Commander Resources.
Diversification Opportunities for Anglo American and Commander Resources
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and Commander is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources 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 Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Anglo American i.e., Anglo American and Commander Resources go up and down completely randomly.
Pair Corralation between Anglo American and Commander Resources
Assuming the 90 days horizon Anglo American plc is expected to generate 0.72 times more return on investment than Commander Resources. However, Anglo American plc is 1.38 times less risky than Commander Resources. It trades about 0.04 of its potential returns per unit of risk. Commander Resources is currently generating about 0.01 per unit of risk. If you would invest 2,499 in Anglo American plc on September 1, 2024 and sell it today you would earn a total of 506.00 from holding Anglo American plc or generate 20.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.26% |
| Values | Daily Returns |
Anglo American plc vs. Commander Resources
Performance |
| Timeline |
| Anglo American plc |
| Commander Resources |
Anglo American and Commander Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Commander Resources
The main advantage of trading using opposite Anglo American and Commander Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Commander Resources 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 Commander Resources will offset losses from the drop in Commander Resources' long position.| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 ADR |
| Commander Resources vs. ATT Inc | Commander Resources vs. Merck Company | Commander Resources vs. Walt Disney | Commander Resources vs. Caterpillar |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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