Correlation Between Anglo American and Summa Silver
Can any of the company-specific risk be diversified away by investing in both Anglo American and Summa Silver 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 Summa Silver 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 Summa Silver Corp, you can compare the effects of market volatilities on Anglo American and Summa Silver 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 Summa Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Summa Silver.
Diversification Opportunities for Anglo American and Summa Silver
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anglo and Summa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Summa Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summa Silver 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 Platinum are associated (or correlated) with Summa Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summa Silver Corp has no effect on the direction of Anglo American i.e., Anglo American and Summa Silver go up and down completely randomly.
Pair Corralation between Anglo American and Summa Silver
Assuming the 90 days horizon Anglo American is expected to generate 2.33 times less return on investment than Summa Silver. But when comparing it to its historical volatility, Anglo American Platinum is 2.1 times less risky than Summa Silver. It trades about 0.15 of its potential returns per unit of risk. Summa Silver Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Summa Silver Corp on October 20, 2024 and sell it today you would earn a total of 3.00 from holding Summa Silver Corp or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American Platinum vs. Summa Silver Corp
Performance |
| Timeline |
| Anglo American Platinum |
| Summa Silver Corp |
Anglo American and Summa Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Summa Silver
The main advantage of trading using opposite Anglo American and Summa Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Summa Silver 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 Summa Silver will offset losses from the drop in Summa Silver's long position.| Anglo American vs. Aptiv PLC | Anglo American vs. Brunswick | Anglo American vs. Adient PLC | Anglo American vs. Proficient Auto Logistics, |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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