Correlation Between Anglo American and Green Battery
Can any of the company-specific risk be diversified away by investing in both Anglo American and Green Battery 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 Green Battery 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 Green Battery Minerals, you can compare the effects of market volatilities on Anglo American and Green Battery 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 Green Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Green Battery.
Diversification Opportunities for Anglo American and Green Battery
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and Green is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and Green Battery Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Battery Minerals 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 Green Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Battery Minerals has no effect on the direction of Anglo American i.e., Anglo American and Green Battery go up and down completely randomly.
Pair Corralation between Anglo American and Green Battery
Assuming the 90 days horizon Anglo American plc is expected to generate 0.44 times more return on investment than Green Battery. However, Anglo American plc is 2.29 times less risky than Green Battery. It trades about 0.01 of its potential returns per unit of risk. Green Battery Minerals is currently generating about 0.0 per unit of risk. If you would invest 3,649 in Anglo American plc on September 3, 2024 and sell it today you would lose (644.00) from holding Anglo American plc or give up 17.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.02% |
| Values | Daily Returns |
Anglo American plc vs. Green Battery Minerals
Performance |
| Timeline |
| Anglo American plc |
| Green Battery Minerals |
Anglo American and Green Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Green Battery
The main advantage of trading using opposite Anglo American and Green Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Green Battery 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 Green Battery will offset losses from the drop in Green Battery'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 |
| Green Battery vs. Qubec Nickel Corp | Green Battery vs. IGO Limited | Green Battery vs. Anson Resources Limited | Green Battery vs. Avarone Metals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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