Correlation Between AngloGold Ashanti and Newmont Goldcorp
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp Corp, you can compare the effects of market volatilities on AngloGold Ashanti and Newmont Goldcorp 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 Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Newmont Goldcorp.
Diversification Opportunities for AngloGold Ashanti and Newmont Goldcorp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AngloGold and Newmont is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp 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 Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Newmont Goldcorp go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Newmont Goldcorp
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 1.28 times more return on investment than Newmont Goldcorp. However, AngloGold Ashanti is 1.28 times more volatile than Newmont Goldcorp Corp. It trades about 0.04 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.01 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Newmont Goldcorp Corp
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Newmont Goldcorp Corp |
AngloGold Ashanti and Newmont Goldcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Newmont Goldcorp
The main advantage of trading using opposite AngloGold Ashanti and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Newmont Goldcorp 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 Newmont Goldcorp will offset losses from the drop in Newmont Goldcorp's long position.The idea behind AngloGold Ashanti plc and Newmont Goldcorp Corp 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.| Newmont Goldcorp vs. Pan American Silver | Newmont Goldcorp vs. Agnico Eagle Mines | Newmont Goldcorp vs. Kinross Gold | Newmont Goldcorp vs. Wheaton Precious Metals |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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