Correlation Between GoldMining and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both GoldMining and AngloGold Ashanti 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 GoldMining and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and AngloGold Ashanti plc, you can compare the effects of market volatilities on GoldMining and AngloGold Ashanti 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 GoldMining with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and AngloGold Ashanti.
Diversification Opportunities for GoldMining and AngloGold Ashanti
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GoldMining and AngloGold is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and AngloGold Ashanti plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AngloGold Ashanti plc and GoldMining 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 GoldMining are associated (or correlated) with AngloGold Ashanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AngloGold Ashanti plc has no effect on the direction of GoldMining i.e., GoldMining and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between GoldMining and AngloGold Ashanti
Given the investment horizon of 90 days GoldMining is expected to generate 0.88 times more return on investment than AngloGold Ashanti. However, GoldMining is 1.14 times less risky than AngloGold Ashanti. It trades about -0.07 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about -0.14 per unit of risk. If you would invest 93.00 in GoldMining on August 27, 2024 and sell it today you would lose (4.00) from holding GoldMining or give up 4.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GoldMining vs. AngloGold Ashanti plc
Performance |
| Timeline |
| GoldMining |
| AngloGold Ashanti plc |
GoldMining and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and AngloGold Ashanti
The main advantage of trading using opposite GoldMining and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, AngloGold Ashanti 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 AngloGold Ashanti will offset losses from the drop in AngloGold Ashanti's long position.| GoldMining vs. Gold Royalty Corp | GoldMining vs. Uranium Royalty Corp | GoldMining vs. Metalla Royalty Streaming | GoldMining vs. Equinox Gold Corp |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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