Correlation Between Anglo American and Platinum Group
Can any of the company-specific risk be diversified away by investing in both Anglo American and Platinum Group 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 Platinum Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American Platinum and Platinum Group Metals, you can compare the effects of market volatilities on Anglo American and Platinum Group 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 Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Platinum Group.
Diversification Opportunities for Anglo American and Platinum Group
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anglo and Platinum is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals 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 Platinum are associated (or correlated) with Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Anglo American i.e., Anglo American and Platinum Group go up and down completely randomly.
Pair Corralation between Anglo American and Platinum Group
Assuming the 90 days horizon Anglo American Platinum is expected to under-perform the Platinum Group. In addition to that, Anglo American is 1.01 times more volatile than Platinum Group Metals. It trades about -0.23 of its total potential returns per unit of risk. Platinum Group Metals is currently generating about -0.02 per unit of volatility. If you would invest 181.00 in Platinum Group Metals on September 1, 2024 and sell it today you would lose (8.00) from holding Platinum Group Metals or give up 4.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American Platinum vs. Platinum Group Metals
Performance |
| Timeline |
| Anglo American Platinum |
| Platinum Group Metals |
Anglo American and Platinum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Platinum Group
The main advantage of trading using opposite Anglo American and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Platinum Group 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 Platinum Group will offset losses from the drop in Platinum Group's long position.| Anglo American vs. Defiance Silver Corp | Anglo American vs. HUMANA INC | Anglo American vs. SCOR PK | Anglo American vs. Aquagold International |
| Platinum Group vs. Endeavour Silver Corp | Platinum Group vs. Avino Silver Gold | Platinum Group vs. Fortuna Silver Mines | Platinum Group vs. Impala Platinum Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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