Correlation Between AngloGold Ashanti and Clearwater Paper
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Clearwater Paper 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 AngloGold Ashanti and Clearwater Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti plc and Clearwater Paper, you can compare the effects of market volatilities on AngloGold Ashanti and Clearwater Paper 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 AngloGold Ashanti with a short position of Clearwater Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Clearwater Paper.
Diversification Opportunities for AngloGold Ashanti and Clearwater Paper
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AngloGold and Clearwater is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Clearwater Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Paper and AngloGold Ashanti 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 AngloGold Ashanti plc are associated (or correlated) with Clearwater Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearwater Paper has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Clearwater Paper go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Clearwater Paper
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 0.79 times more return on investment than Clearwater Paper. However, AngloGold Ashanti plc is 1.26 times less risky than Clearwater Paper. It trades about 0.02 of its potential returns per unit of risk. Clearwater Paper is currently generating about -0.13 per unit of risk. If you would invest 2,449 in AngloGold Ashanti plc on August 28, 2024 and sell it today you would earn a total of 71.00 from holding AngloGold Ashanti plc or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Clearwater Paper
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Clearwater Paper |
AngloGold Ashanti and Clearwater Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Clearwater Paper
The main advantage of trading using opposite AngloGold Ashanti and Clearwater Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Clearwater Paper 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 Clearwater Paper will offset losses from the drop in Clearwater Paper's long position.The idea behind AngloGold Ashanti plc and Clearwater Paper pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Clearwater Paper vs. Mercer International | Clearwater Paper vs. Klabin Sa A | Clearwater Paper vs. UPM Kymmene Oyj | Clearwater Paper vs. Mondi PLC ADR |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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