Correlation Between AngloGold Ashanti and Northern Star
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Northern Star 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 Northern Star 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 Northern Star Resources, you can compare the effects of market volatilities on AngloGold Ashanti and Northern Star 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 Northern Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Northern Star.
Diversification Opportunities for AngloGold Ashanti and Northern Star
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AngloGold and Northern is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Northern Star Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Star Resources 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 Northern Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Star Resources has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Northern Star go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Northern Star
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 0.61 times more return on investment than Northern Star. However, AngloGold Ashanti plc is 1.64 times less risky than Northern Star. It trades about 0.62 of its potential returns per unit of risk. Northern Star Resources is currently generating about 0.19 per unit of risk. If you would invest 2,445 in AngloGold Ashanti plc on November 8, 2024 and sell it today you would earn a total of 705.00 from holding AngloGold Ashanti plc or generate 28.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Northern Star Resources
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Northern Star Resources |
AngloGold Ashanti and Northern Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Northern Star
The main advantage of trading using opposite AngloGold Ashanti and Northern Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Northern Star 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 Northern Star will offset losses from the drop in Northern Star'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 |
| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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