Correlation Between B2Gold Corp and AngloGold Ashanti

Can any of the company-specific risk be diversified away by investing in both B2Gold 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 B2Gold 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 B2Gold Corp and AngloGold Ashanti plc, you can compare the effects of market volatilities on B2Gold 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 B2Gold Corp with a short position of AngloGold Ashanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of B2Gold Corp and AngloGold Ashanti.

Diversification Opportunities for B2Gold Corp and AngloGold Ashanti

0.81

Correlation Coefficient

B2Gold Corp  AngloGold Ashanti

Very poor diversification

The 3 months correlation between B2Gold and AngloGold is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding B2Gold 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 B2Gold 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 B2Gold 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 B2Gold Corp i.e., B2Gold Corp and AngloGold Ashanti go up and down completely randomly.

Pair Corralation between B2Gold Corp and AngloGold Ashanti

Considering the 90-day investment horizon B2Gold Corp is expected to generate 7.94 times less return on investment than AngloGold Ashanti. But when comparing it to its historical volatility, B2Gold Corp is 1.13 times less risky than AngloGold Ashanti. It trades about 0.01 of its potential returns per unit of risk. AngloGold Ashanti plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,596  in AngloGold Ashanti plc on September 12, 2024 and sell it today you would earn a total of  1,102  from holding AngloGold Ashanti plc or generate 69.08% return on investment over 90 days.

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

B2Gold Corp  vs.  AngloGold Ashanti plc

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AngloGold Ashanti plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AngloGold Ashanti plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AngloGold Ashanti is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with B2Gold Corp and AngloGold Ashanti

The main advantage of trading using opposite B2Gold Corp and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if B2Gold 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.

The idea behind B2Gold Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.