Correlation Between Anglo American and Fresnillo PLC
Can any of the company-specific risk be diversified away by investing in both Anglo American and Fresnillo PLC 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 Fresnillo PLC 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 Fresnillo PLC, you can compare the effects of market volatilities on Anglo American and Fresnillo PLC 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 Fresnillo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and Fresnillo PLC.
Diversification Opportunities for Anglo American and Fresnillo PLC
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Anglo and Fresnillo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American Platinum and Fresnillo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresnillo PLC 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 Fresnillo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresnillo PLC has no effect on the direction of Anglo American i.e., Anglo American and Fresnillo PLC go up and down completely randomly.
Pair Corralation between Anglo American and Fresnillo PLC
Assuming the 90 days horizon Anglo American Platinum is expected to under-perform the Fresnillo PLC. In addition to that, Anglo American is 1.23 times more volatile than Fresnillo PLC. It trades about -0.2 of its total potential returns per unit of risk. Fresnillo PLC is currently generating about -0.21 per unit of volatility. If you would invest 950.00 in Fresnillo PLC on September 1, 2024 and sell it today you would lose (128.00) from holding Fresnillo PLC or give up 13.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Anglo American Platinum vs. Fresnillo PLC
Performance |
| Timeline |
| Anglo American Platinum |
| Fresnillo PLC |
Anglo American and Fresnillo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and Fresnillo PLC
The main advantage of trading using opposite Anglo American and Fresnillo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, Fresnillo PLC 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 Fresnillo PLC will offset losses from the drop in Fresnillo PLC's long position.| Anglo American vs. Defiance Silver Corp | Anglo American vs. HUMANA INC | Anglo American vs. SCOR PK | Anglo American vs. Aquagold International |
| Fresnillo PLC vs. Defiance Silver Corp | Fresnillo PLC vs. HUMANA INC | Fresnillo PLC vs. SCOR PK | Fresnillo PLC vs. Aquagold International |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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