Correlation Between Anglo American and WT OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Anglo American and WT OFFSHORE 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 Anglo American and WT OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anglo American plc and WT OFFSHORE, you can compare the effects of market volatilities on Anglo American and WT OFFSHORE 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 Anglo American with a short position of WT OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anglo American and WT OFFSHORE.
Diversification Opportunities for Anglo American and WT OFFSHORE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anglo and UWV is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American plc and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE and Anglo American 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 Anglo American plc are associated (or correlated) with WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of Anglo American i.e., Anglo American and WT OFFSHORE go up and down completely randomly.
Pair Corralation between Anglo American and WT OFFSHORE
Assuming the 90 days trading horizon Anglo American plc is expected to generate 0.74 times more return on investment than WT OFFSHORE. However, Anglo American plc is 1.36 times less risky than WT OFFSHORE. It trades about 0.07 of its potential returns per unit of risk. WT OFFSHORE is currently generating about -0.12 per unit of risk. If you would invest 2,890 in Anglo American plc on September 4, 2024 and sell it today you would earn a total of 95.00 from holding Anglo American plc or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anglo American plc vs. WT OFFSHORE
Performance |
| Timeline |
| Anglo American plc |
| WT OFFSHORE |
Anglo American and WT OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anglo American and WT OFFSHORE
The main advantage of trading using opposite Anglo American and WT OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anglo American position performs unexpectedly, WT OFFSHORE 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 WT OFFSHORE will offset losses from the drop in WT OFFSHORE's long position.| Anglo American vs. WT OFFSHORE | Anglo American vs. SCIENCE IN SPORT | Anglo American vs. SIEM OFFSHORE NEW | Anglo American vs. COLUMBIA SPORTSWEAR |
| WT OFFSHORE vs. TOTAL GABON | WT OFFSHORE vs. Walgreens Boots Alliance | WT OFFSHORE vs. Peak Resources 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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