Correlation Between AngloGold Ashanti and Franco Nevada
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Franco Nevada 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 Franco Nevada 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 Franco Nevada, you can compare the effects of market volatilities on AngloGold Ashanti and Franco Nevada 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 Franco Nevada. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Franco Nevada.
Diversification Opportunities for AngloGold Ashanti and Franco Nevada
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AngloGold and Franco is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Franco Nevada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franco Nevada 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 Franco Nevada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franco Nevada has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Franco Nevada go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Franco Nevada
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 1.64 times more return on investment than Franco Nevada. However, AngloGold Ashanti is 1.64 times more volatile than Franco Nevada. It trades about 0.04 of its potential returns per unit of risk. Franco Nevada is currently generating about 0.0 per unit of risk. If you would invest 1,958 in AngloGold Ashanti plc on August 27, 2024 and sell it today you would earn a total of 637.00 from holding AngloGold Ashanti plc or generate 32.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Franco Nevada
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Franco Nevada |
AngloGold Ashanti and Franco Nevada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Franco Nevada
The main advantage of trading using opposite AngloGold Ashanti and Franco Nevada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Franco Nevada 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 Franco Nevada will offset losses from the drop in Franco Nevada's long position.The idea behind AngloGold Ashanti plc and Franco Nevada 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.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |