Correlation Between AngloGold Ashanti and Alamos Gold
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Alamos Gold 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 AngloGold Ashanti and Alamos Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti plc and Alamos Gold, you can compare the effects of market volatilities on AngloGold Ashanti and Alamos Gold 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 AngloGold Ashanti with a short position of Alamos Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Alamos Gold.
Diversification Opportunities for AngloGold Ashanti and Alamos Gold
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AngloGold and Alamos is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and AngloGold Ashanti 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 AngloGold Ashanti plc are associated (or correlated) with Alamos Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamos Gold has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Alamos Gold go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Alamos Gold
Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 2.68 times less return on investment than Alamos Gold. In addition to that, AngloGold Ashanti is 1.24 times more volatile than Alamos Gold. It trades about 0.08 of its total potential returns per unit of risk. Alamos Gold is currently generating about 0.25 per unit of volatility. If you would invest 1,364 in Alamos Gold on January 25, 2024 and sell it today you would earn a total of 157.50 from holding Alamos Gold or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Alamos Gold
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Alamos Gold |
AngloGold Ashanti and Alamos Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Alamos Gold
The main advantage of trading using opposite AngloGold Ashanti and Alamos Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Alamos Gold 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 Alamos Gold will offset losses from the drop in Alamos Gold's long position.The idea behind AngloGold Ashanti plc and Alamos Gold 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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