Correlation Between Cobalt Blue and Anglo American
Can any of the company-specific risk be diversified away by investing in both Cobalt Blue 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 Cobalt Blue and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cobalt Blue Holdings and Anglo American PLC, you can compare the effects of market volatilities on Cobalt Blue 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 Cobalt Blue with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cobalt Blue and Anglo American.
Diversification Opportunities for Cobalt Blue and Anglo American
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cobalt and Anglo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cobalt Blue Holdings 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 Cobalt Blue 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 Cobalt Blue Holdings 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 Cobalt Blue i.e., Cobalt Blue and Anglo American go up and down completely randomly.
Pair Corralation between Cobalt Blue and Anglo American
Assuming the 90 days horizon Cobalt Blue Holdings is expected to under-perform the Anglo American. In addition to that, Cobalt Blue is 3.21 times more volatile than Anglo American PLC. It trades about -0.16 of its total potential returns per unit of risk. Anglo American PLC is currently generating about -0.04 per unit of volatility. If you would invest 1,561 in Anglo American PLC on August 31, 2024 and sell it today you would lose (44.00) from holding Anglo American PLC or give up 2.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cobalt Blue Holdings vs. Anglo American PLC
Performance |
| Timeline |
| Cobalt Blue Holdings |
| Anglo American PLC |
Cobalt Blue and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cobalt Blue and Anglo American
The main advantage of trading using opposite Cobalt Blue and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cobalt Blue 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.| Cobalt Blue vs. Aurelia Metals Limited | Cobalt Blue vs. Centaurus Metals Limited | Cobalt Blue vs. Artemis Resources | Cobalt Blue vs. Ascendant Resources |
| Anglo American vs. BHP Group Limited | Anglo American vs. Avarone Metals | Anglo American vs. Huntsman Exploration | Anglo American vs. Aurelia Metals Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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