Correlation Between Ferrexpo PLC and Anglo American
Can any of the company-specific risk be diversified away by investing in both Ferrexpo 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 Ferrexpo 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 Ferrexpo PLC and Anglo American PLC, you can compare the effects of market volatilities on Ferrexpo 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 Ferrexpo PLC with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Anglo American.
Diversification Opportunities for Ferrexpo PLC and Anglo American
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ferrexpo and Anglo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC 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 Ferrexpo 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 Ferrexpo 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 PLC has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Anglo American go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Anglo American
Assuming the 90 days trading horizon Ferrexpo PLC is expected to generate 1.63 times more return on investment than Anglo American. However, Ferrexpo PLC is 1.63 times more volatile than Anglo American PLC. It trades about 0.0 of its potential returns per unit of risk. Anglo American PLC is currently generating about -0.01 per unit of risk. If you would invest 15,826 in Ferrexpo PLC on September 14, 2024 and sell it today you would lose (4,866) from holding Ferrexpo PLC or give up 30.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ferrexpo PLC vs. Anglo American PLC
Performance |
| Timeline |
| Ferrexpo PLC |
| Anglo American PLC |
Ferrexpo PLC and Anglo American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Anglo American
The main advantage of trading using opposite Ferrexpo PLC and Anglo American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo 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.| Ferrexpo PLC vs. Roper Technologies | Ferrexpo PLC vs. MoneysupermarketCom Group PLC | Ferrexpo PLC vs. Addtech | Ferrexpo PLC vs. Molson Coors Beverage |
| Anglo American vs. Givaudan SA | Anglo American vs. Antofagasta PLC | Anglo American vs. Ferrexpo PLC | Anglo American vs. Atalaya Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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