Correlation Between AngloGold Ashanti and Newmont Goldcorp

Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Newmont Goldcorp 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 Newmont Goldcorp 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 Newmont Goldcorp Corp, you can compare the effects of market volatilities on AngloGold Ashanti and Newmont Goldcorp 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 Newmont Goldcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Newmont Goldcorp.

Diversification Opportunities for AngloGold Ashanti and Newmont Goldcorp

0.84

Correlation Coefficient

AngloGold Ashanti  Newmont Goldcorp

Very poor diversification

The 3 months correlation between AngloGold and Newmont is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Newmont Goldcorp Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Goldcorp Corp 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 Newmont Goldcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Goldcorp Corp has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Newmont Goldcorp go up and down completely randomly.

Pair Corralation between AngloGold Ashanti and Newmont Goldcorp

Allowing for the 90-day total investment horizon AngloGold Ashanti plc is expected to generate 1.25 times more return on investment than Newmont Goldcorp. However, AngloGold Ashanti is 1.25 times more volatile than Newmont Goldcorp Corp. It trades about 0.16 of its potential returns per unit of risk. Newmont Goldcorp Corp is currently generating about 0.04 per unit of risk. If you would invest  2,494  in AngloGold Ashanti plc on November 28, 2024 and sell it today you would earn a total of  610.00  from holding AngloGold Ashanti plc or generate 24.46% 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.  Newmont Goldcorp Corp

AngloGold Ashanti plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AngloGold Ashanti plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, AngloGold Ashanti unveiled solid returns over the last few months and may actually be approaching a breakup point.

Newmont Goldcorp Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newmont Goldcorp Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Newmont Goldcorp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AngloGold Ashanti and Newmont Goldcorp

The main advantage of trading using opposite AngloGold Ashanti and Newmont Goldcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Newmont Goldcorp 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 Newmont Goldcorp will offset losses from the drop in Newmont Goldcorp's long position.

The idea behind AngloGold Ashanti plc and Newmont Goldcorp Corp 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.