Correlation Between Allegiant Gold and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both Allegiant Gold 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 Allegiant Gold and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegiant Gold and AngloGold Ashanti plc, you can compare the effects of market volatilities on Allegiant Gold 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 Allegiant Gold with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegiant Gold and AngloGold Ashanti.
Diversification Opportunities for Allegiant Gold and AngloGold Ashanti
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Allegiant and AngloGold is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Allegiant Gold 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 Allegiant Gold 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 Allegiant Gold 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 Allegiant Gold i.e., Allegiant Gold and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between Allegiant Gold and AngloGold Ashanti
Assuming the 90 days horizon Allegiant Gold is expected to generate 2.52 times more return on investment than AngloGold Ashanti. However, Allegiant Gold is 2.52 times more volatile than AngloGold Ashanti plc. It trades about 0.13 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.05 per unit of risk. If you would invest 8.10 in Allegiant Gold on March 7, 2024 and sell it today you would earn a total of 3.90 from holding Allegiant Gold or generate 48.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Allegiant Gold vs. AngloGold Ashanti plc
Performance |
Timeline |
Allegiant Gold |
AngloGold Ashanti plc |
Allegiant Gold and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allegiant Gold and AngloGold Ashanti
The main advantage of trading using opposite Allegiant Gold and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegiant Gold 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.Allegiant Gold vs. Endurance Gold | Allegiant Gold vs. Sixty North Gold | Allegiant Gold vs. St James Gold | Allegiant Gold vs. Grande Portage Resources |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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