Correlation Between Anglo American and Copper 360
Can any of the company-specific risk be diversified away by investing in both Anglo American and Copper 360 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 Copper 360 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 Copper 360, you can compare the effects of market volatilities on Anglo American and Copper 360 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 Copper 360. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Copper 360.
Diversification Opportunities for Anglo American and Copper 360
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anglo and Copper is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Copper 360 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 360 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 Copper 360. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper 360 has no effect on the direction of Anglo American i.e., Anglo American and Copper 360 go up and down completely randomly.
Pair Corralation between Anglo American and Copper 360
Assuming the 90 days trading horizon Anglo American PLC is expected to generate 0.7 times more return on investment than Copper 360. However, Anglo American PLC is 1.43 times less risky than Copper 360. It trades about -0.02 of its potential returns per unit of risk. Copper 360 is currently generating about -0.06 per unit of risk. If you would invest 5,378,300 in Anglo American PLC on August 24, 2024 and sell it today you would lose (65,300) from holding Anglo American PLC or give up 1.21% 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. Copper 360
Performance |
| Timeline |
| Anglo American PLC |
| Copper 360 |
Anglo American and Copper 360 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Copper 360
The main advantage of trading using opposite Anglo American and Copper 360 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Copper 360 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 Copper 360 will offset losses from the drop in Copper 360's long position.| Anglo American vs. HomeChoice Investments | Anglo American vs. Hosken Consolidated Investments | Anglo American vs. Astral Foods | Anglo American vs. CA Sales Holdings |
| Copper 360 vs. British American Tobacco | Copper 360 vs. Anglo American PLC | Copper 360 vs. ABSA Bank Limited | Copper 360 vs. Firstrand |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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