Correlation Between AngloGold Ashanti and Kaiser Aluminum
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum, you can compare the effects of market volatilities on AngloGold Ashanti and Kaiser Aluminum 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 Kaiser Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Kaiser Aluminum.
Diversification Opportunities for AngloGold Ashanti and Kaiser Aluminum
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AngloGold and Kaiser is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Kaiser Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaiser Aluminum 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 Kaiser Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaiser Aluminum has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Kaiser Aluminum go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Kaiser Aluminum
Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 1.13 times less return on investment than Kaiser Aluminum. In addition to that, AngloGold Ashanti is 1.04 times more volatile than Kaiser Aluminum. It trades about 0.06 of its total potential returns per unit of risk. Kaiser Aluminum is currently generating about 0.07 per unit of volatility. If you would invest 5,618 in Kaiser Aluminum on August 26, 2024 and sell it today you would earn a total of 2,547 from holding Kaiser Aluminum or generate 45.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Kaiser Aluminum
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Kaiser Aluminum |
AngloGold Ashanti and Kaiser Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Kaiser Aluminum
The main advantage of trading using opposite AngloGold Ashanti and Kaiser Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Kaiser Aluminum 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 Kaiser Aluminum will offset losses from the drop in Kaiser Aluminum's long position.| AngloGold Ashanti vs. Harmony Gold Mining | AngloGold Ashanti vs. Eldorado Gold Corp | AngloGold Ashanti vs. Kinross Gold | AngloGold Ashanti vs. Pan American Silver |
| Kaiser Aluminum vs. Century Aluminum | Kaiser Aluminum vs. China Hongqiao Group | Kaiser Aluminum vs. Constellium Nv | Kaiser Aluminum vs. Alcoa Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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