Correlation Between Alcoa Corp and AngloGold Ashanti
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp 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 Alcoa Corp and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and AngloGold Ashanti plc, you can compare the effects of market volatilities on Alcoa Corp 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 Alcoa Corp with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and AngloGold Ashanti.
Diversification Opportunities for Alcoa Corp and AngloGold Ashanti
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alcoa and AngloGold is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp 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 Alcoa Corp 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 Alcoa Corp 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 Alcoa Corp i.e., Alcoa Corp and AngloGold Ashanti go up and down completely randomly.
Pair Corralation between Alcoa Corp and AngloGold Ashanti
Allowing for the 90-day total investment horizon Alcoa Corp is expected to generate 1.23 times more return on investment than AngloGold Ashanti. However, Alcoa Corp is 1.23 times more volatile than AngloGold Ashanti plc. It trades about 0.26 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.27 per unit of risk. If you would invest 3,135 in Alcoa Corp on January 20, 2024 and sell it today you would earn a total of 412.00 from holding Alcoa Corp or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alcoa Corp vs. AngloGold Ashanti plc
Performance |
| Timeline |
| Alcoa Corp |
| AngloGold Ashanti plc |
Alcoa Corp and AngloGold Ashanti Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and AngloGold Ashanti
The main advantage of trading using opposite Alcoa Corp and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp 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.| Alcoa Corp vs. Constellium Nv | Alcoa Corp vs. Century Aluminum | Alcoa Corp vs. China Hongqiao Group | Alcoa Corp vs. Kaiser Aluminum |
| AngloGold Ashanti vs. Harmony Gold Mining | AngloGold Ashanti vs. Eldorado Gold Corp | AngloGold Ashanti vs. Kinross Gold | AngloGold Ashanti vs. Pan American Silver |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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