Correlation Between Boliden AB and Anglo American
Can any of the company-specific risk be diversified away by investing in both Boliden AB and Anglo American 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 Boliden AB and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boliden AB and Anglo American plc, you can compare the effects of market volatilities on Boliden AB and Anglo American 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 Boliden AB with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boliden AB and Anglo American.
Diversification Opportunities for Boliden AB and Anglo American
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Boliden and Anglo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Boliden AB and Anglo American plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American plc and Boliden AB 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 Boliden AB are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American plc has no effect on the direction of Boliden AB i.e., Boliden AB and Anglo American go up and down completely randomly.
Pair Corralation between Boliden AB and Anglo American
If you would invest (100.00) in Anglo American plc on August 31, 2024 and sell it today you would earn a total of 100.00 from holding Anglo American plc or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Boliden AB vs. Anglo American plc
Performance |
| Timeline |
| Boliden AB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Anglo American plc |
Boliden AB and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boliden AB and Anglo American
The main advantage of trading using opposite Boliden AB and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boliden AB position performs unexpectedly, Anglo American 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 Anglo American will offset losses from the drop in Anglo American's long position.| Boliden AB vs. Avarone Metals | Boliden AB vs. Aurelia Metals Limited | Boliden AB vs. Adriatic Metals PLC | Boliden AB vs. Huntsman Exploration |
| Anglo American vs. Glencore PLC ADR | Anglo American vs. Fortescue Metals Group | Anglo American vs. South32 Limited | Anglo American vs. South32 ADR |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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