Correlation Between Gold Fields and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both Gold Fields 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 Gold Fields and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Fields Ltd and AngloGold Ashanti plc, you can compare the effects of market volatilities on Gold Fields 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 Gold Fields with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Fields and AngloGold Ashanti.
Diversification Opportunities for Gold Fields and AngloGold Ashanti
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and AngloGold is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gold Fields Ltd 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 Gold Fields 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 Gold Fields Ltd 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 Gold Fields i.e., Gold Fields and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between Gold Fields and AngloGold Ashanti
Considering the 90-day investment horizon Gold Fields is expected to generate 1.18 times less return on investment than AngloGold Ashanti. In addition to that, Gold Fields is 1.02 times more volatile than AngloGold Ashanti plc. It trades about 0.24 of its total potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.29 per unit of volatility. If you would invest 1,719 in AngloGold Ashanti plc on January 17, 2024 and sell it today you would earn a total of 662.00 from holding AngloGold Ashanti plc or generate 38.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Fields Ltd vs. AngloGold Ashanti plc
Performance |
| Timeline |
| Gold Fields |
| AngloGold Ashanti plc |
Gold Fields and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Fields and AngloGold Ashanti
The main advantage of trading using opposite Gold Fields and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Fields 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.| Gold Fields vs. China Hongqiao Group | Gold Fields vs. Norsk Hydro ASA | Gold Fields vs. Aquagold International | Gold Fields vs. Thrivent High Yield |
| AngloGold Ashanti vs. China Hongqiao Group | AngloGold Ashanti vs. Norsk Hydro ASA | AngloGold Ashanti vs. Aquagold International | AngloGold Ashanti vs. Thrivent High Yield |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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