Correlation Between AngloGold Ashanti and Sandstorm Gold
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Sandstorm Gold 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 Sandstorm Gold 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 Sandstorm Gold Ltd, you can compare the effects of market volatilities on AngloGold Ashanti and Sandstorm Gold 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 Sandstorm Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Sandstorm Gold.
Diversification Opportunities for AngloGold Ashanti and Sandstorm Gold
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AngloGold and Sandstorm is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Sandstorm Gold go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Sandstorm Gold
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 1.27 times more return on investment than Sandstorm Gold. However, AngloGold Ashanti is 1.27 times more volatile than Sandstorm Gold Ltd. It trades about 0.07 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about -0.01 per unit of risk. If you would invest 2,729 in AngloGold Ashanti plc on November 1, 2024 and sell it today you would earn a total of 264.00 from holding AngloGold Ashanti plc or generate 9.67% 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. Sandstorm Gold Ltd
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Sandstorm Gold |
AngloGold Ashanti and Sandstorm Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Sandstorm Gold
The main advantage of trading using opposite AngloGold Ashanti and Sandstorm Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Sandstorm Gold 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 Sandstorm Gold will offset losses from the drop in Sandstorm Gold'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 |
| Sandstorm Gold vs. Franco Nevada | Sandstorm Gold vs. Royal Gold | Sandstorm Gold vs. Alamos Gold | Sandstorm Gold vs. Seabridge Gold |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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