Correlation Between Albertsons Companies and Anglo American
Can any of the company-specific risk be diversified away by investing in both Albertsons Companies and Anglo American 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 Albertsons Companies and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albertsons Companies and Anglo American Platinum, you can compare the effects of market volatilities on Albertsons Companies and Anglo American 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 Albertsons Companies with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albertsons Companies and Anglo American.
Diversification Opportunities for Albertsons Companies and Anglo American
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Albertsons and Anglo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Albertsons Companies and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Albertsons Companies 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 Albertsons Companies are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Albertsons Companies i.e., Albertsons Companies and Anglo American go up and down completely randomly.
Pair Corralation between Albertsons Companies and Anglo American
Considering the 90-day investment horizon Albertsons Companies is expected to generate 11.4 times less return on investment than Anglo American. But when comparing it to its historical volatility, Albertsons Companies is 4.28 times less risky than Anglo American. It trades about 0.09 of its potential returns per unit of risk. Anglo American Platinum is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,942 in Anglo American Platinum on November 4, 2024 and sell it today you would earn a total of 727.00 from holding Anglo American Platinum or generate 24.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Albertsons Companies vs. Anglo American Platinum
Performance |
| Timeline |
| Albertsons Companies |
| Anglo American Platinum |
Albertsons Companies and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albertsons Companies and Anglo American
The main advantage of trading using opposite Albertsons Companies and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albertsons Companies position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Albertsons Companies vs. Sprouts Farmers Market | Albertsons Companies vs. Krispy Kreme | Albertsons Companies vs. Grocery Outlet Holding | Albertsons Companies vs. Weis Markets |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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