Correlation Between Anglo American and West Mining
Can any of the company-specific risk be diversified away by investing in both Anglo American and West Mining 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 West Mining 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 West Mining Corp, you can compare the effects of market volatilities on Anglo American and West Mining 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 West Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and West Mining.
Diversification Opportunities for Anglo American and West Mining
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anglo and West is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and West Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Mining Corp 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 West Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Mining Corp has no effect on the direction of Anglo American i.e., Anglo American and West Mining go up and down completely randomly.
Pair Corralation between Anglo American and West Mining
Assuming the 90 days horizon Anglo American plc is expected to generate 0.26 times more return on investment than West Mining. However, Anglo American plc is 3.83 times less risky than West Mining. It trades about -0.11 of its potential returns per unit of risk. West Mining Corp is currently generating about -0.13 per unit of risk. If you would invest 3,164 in Anglo American plc on September 1, 2024 and sell it today you would lose (159.00) from holding Anglo American plc or give up 5.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American plc vs. West Mining Corp
Performance |
| Timeline |
| Anglo American plc |
| West Mining Corp |
Anglo American and West Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and West Mining
The main advantage of trading using opposite Anglo American and West Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, West Mining 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 West Mining will offset losses from the drop in West Mining'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 |
| West Mining vs. ATT Inc | West Mining vs. Merck Company | West Mining vs. Walt Disney | West Mining 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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