Correlation Between AngloGold Ashanti and Gold Fields
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Gold Fields 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 Gold Fields 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 Gold Fields Ltd, you can compare the effects of market volatilities on AngloGold Ashanti and Gold Fields 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 Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Gold Fields.
Diversification Opportunities for AngloGold Ashanti and Gold Fields
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AngloGold and Gold is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields 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 Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Gold Fields go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Gold Fields
Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 0.95 times more return on investment than Gold Fields. However, AngloGold Ashanti plc is 1.06 times less risky than Gold Fields. It trades about 0.15 of its potential returns per unit of risk. Gold Fields Ltd is currently generating about 0.13 per unit of risk. If you would invest 1,737 in AngloGold Ashanti plc on January 25, 2024 and sell it today you would earn a total of 474.00 from holding AngloGold Ashanti plc or generate 27.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Gold Fields Ltd
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Gold Fields |
AngloGold Ashanti and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Gold Fields
The main advantage of trading using opposite AngloGold Ashanti and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' long position.The idea behind AngloGold Ashanti plc and Gold Fields Ltd 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Transaction History View history of all your transactions and understand their impact on performance |