Correlation Between Fresnillo PLC and Anglo American
Can any of the company-specific risk be diversified away by investing in both Fresnillo PLC 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 Fresnillo PLC and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresnillo PLC and Anglo American Platinum, you can compare the effects of market volatilities on Fresnillo PLC 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 Fresnillo PLC with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresnillo PLC and Anglo American.
Diversification Opportunities for Fresnillo PLC and Anglo American
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fresnillo and Anglo is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fresnillo PLC and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Fresnillo PLC 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 Fresnillo PLC 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 Platinum has no effect on the direction of Fresnillo PLC i.e., Fresnillo PLC and Anglo American go up and down completely randomly.
Pair Corralation between Fresnillo PLC and Anglo American
Assuming the 90 days horizon Fresnillo PLC is expected to generate 0.87 times more return on investment than Anglo American. However, Fresnillo PLC is 1.14 times less risky than Anglo American. It trades about -0.31 of its potential returns per unit of risk. Anglo American Platinum is currently generating about -0.32 per unit of risk. If you would invest 984.00 in Fresnillo PLC on August 27, 2024 and sell it today you would lose (184.00) from holding Fresnillo PLC or give up 18.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresnillo PLC vs. Anglo American Platinum
Performance |
| Timeline |
| Fresnillo PLC |
| Anglo American Platinum |
Fresnillo PLC and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresnillo PLC and Anglo American
The main advantage of trading using opposite Fresnillo PLC and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresnillo PLC 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.| Fresnillo PLC vs. Impala Platinum Holdings | Fresnillo PLC vs. Anglo American Platinum | Fresnillo PLC vs. Platinum Group Metals | Fresnillo PLC vs. AbraSilver Resource Corp |
| Anglo American vs. Morningstar Unconstrained Allocation | Anglo American vs. High Yield Municipal Fund | Anglo American vs. Knife River | Anglo American vs. Klckner Co SE |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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