Correlation Between United States and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and AngloGold Ashanti plc, you can compare the effects of market volatilities on United States 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 United States with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and AngloGold Ashanti.
Diversification Opportunities for United States and AngloGold Ashanti
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and AngloGold is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between United States and AngloGold Ashanti
Taking into account the 90-day investment horizon United States Steel is expected to generate 1.12 times more return on investment than AngloGold Ashanti. However, United States is 1.12 times more volatile than AngloGold Ashanti plc. It trades about 0.04 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.03 per unit of risk. If you would invest 2,657 in United States Steel on August 28, 2024 and sell it today you would earn a total of 1,201 from holding United States Steel or generate 45.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. AngloGold Ashanti plc
Performance |
| Timeline |
| United States Steel |
| AngloGold Ashanti plc |
United States and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and AngloGold Ashanti
The main advantage of trading using opposite United States and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.The idea behind United States Steel and AngloGold Ashanti plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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