Correlation Between Wheaton Precious and AngloGold Ashanti

Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and AngloGold Ashanti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wheaton Precious Metals and AngloGold Ashanti plc, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and AngloGold Ashanti.

Diversification Opportunities for Wheaton Precious and AngloGold Ashanti

0.92

Correlation Coefficient

Wheaton Precious  AngloGold Ashanti

Almost no diversification

The 3 months correlation between Wheaton and AngloGold is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and AngloGold Ashanti go up and down completely randomly.

Pair Corralation between Wheaton Precious and AngloGold Ashanti

Considering the 90-day investment horizon Wheaton Precious is expected to generate 1.63 times less return on investment than AngloGold Ashanti. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.51 times less risky than AngloGold Ashanti. It trades about 0.32 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  2,240  in AngloGold Ashanti plc on December 29, 2024 and sell it today you would earn a total of  1,458  from holding AngloGold Ashanti plc or generate 65.09% return on investment over 90 days.

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

Wheaton Precious Metals  vs.  AngloGold Ashanti plc

Wheaton Precious Metals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wheaton Precious Metals are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Wheaton Precious displayed solid returns over the last few months and may actually be approaching a breakup point.

AngloGold Ashanti plc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in AngloGold Ashanti plc are ranked lower than 27 (%) 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.

Pair Trading with Wheaton Precious and AngloGold Ashanti

The main advantage of trading using opposite Wheaton Precious and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.

The idea behind Wheaton Precious Metals and AngloGold Ashanti plc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .