Correlation Between Avient Corp and Anglo American

Can any of the company-specific risk be diversified away by investing in both Avient Corp and Anglo American 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 Avient Corp and Anglo American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Avient Corp and Anglo American Platinum, you can compare the effects of market volatilities on Avient Corp and Anglo American 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 Avient Corp with a short position of Anglo American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avient Corp and Anglo American.

Diversification Opportunities for Avient Corp and Anglo American

-0.02

Correlation Coefficient

Avient Corp  Anglo American

Good diversification

The 3 months correlation between Avient and Anglo is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Anglo American Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anglo American Platinum and Avient 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 Avient Corp are associated (or correlated) with Anglo American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anglo American Platinum has no effect on the direction of Avient Corp i.e., Avient Corp and Anglo American go up and down completely randomly.

Pair Corralation between Avient Corp and Anglo American

Given the investment horizon of 90 days Avient Corp is expected to generate 1.38 times less return on investment than Anglo American. But when comparing it to its historical volatility, Avient Corp is 2.44 times less risky than Anglo American. It trades about 0.08 of its potential returns per unit of risk. Anglo American Platinum is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,910  in Anglo American Platinum on September 12, 2024 and sell it today you would earn a total of  192.00  from holding Anglo American Platinum or generate 6.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Avient Corp  vs.  Anglo American Platinum

Avient Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avient Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Avient Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anglo American Platinum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anglo American Platinum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Anglo American may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Avient Corp and Anglo American

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

The idea behind Avient Corp and Anglo American Platinum 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.