Correlation Between Anglo American and Vizsla Resources

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

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

Diversification Opportunities for Anglo American and Vizsla Resources

0.36

Correlation Coefficient

Anglo American  Vizsla Resources

Weak diversification

The 3 months correlation between Anglo and Vizsla is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Anglo American PLC and Vizsla Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vizsla Resources Corp and Anglo American 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 Anglo American PLC are associated (or correlated) with Vizsla Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vizsla Resources Corp has no effect on the direction of Anglo American i.e., Anglo American and Vizsla Resources go up and down completely randomly.

Pair Corralation between Anglo American and Vizsla Resources

Assuming the 90 days horizon Anglo American is expected to generate 36.37 times less return on investment than Vizsla Resources. But when comparing it to its historical volatility, Anglo American PLC is 1.69 times less risky than Vizsla Resources. It trades about 0.01 of its potential returns per unit of risk. Vizsla Resources Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Vizsla Resources Corp on December 29, 2024 and sell it today you would earn a total of  68.00  from holding Vizsla Resources Corp or generate 40.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Anglo American PLC  vs.  Vizsla Resources Corp

Anglo American PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anglo American PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Anglo American is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vizsla Resources Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vizsla Resources Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Vizsla Resources sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anglo American and Vizsla Resources

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

The idea behind Anglo American PLC and Vizsla Resources 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.