Correlation Between Seabridge Gold and AngloGold Ashanti

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

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

Diversification Opportunities for Seabridge Gold and AngloGold Ashanti

0.84

Correlation Coefficient

Seabridge Gold  AngloGold Ashanti

Very poor diversification

The 3 months correlation between Seabridge and AngloGold is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Seabridge Gold 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 Seabridge Gold 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 Seabridge Gold 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 Seabridge Gold i.e., Seabridge Gold and AngloGold Ashanti go up and down completely randomly.

Pair Corralation between Seabridge Gold and AngloGold Ashanti

Allowing for the 90-day total investment horizon Seabridge Gold is expected to under-perform the AngloGold Ashanti. In addition to that, Seabridge Gold is 1.06 times more volatile than AngloGold Ashanti plc. It trades about -0.13 of its total potential returns per unit of risk. AngloGold Ashanti plc is currently generating about -0.04 per unit of volatility. If you would invest  2,795  in AngloGold Ashanti plc on September 12, 2024 and sell it today you would lose (219.00) from holding AngloGold Ashanti plc or give up 7.84% of portfolio value over 90 days.

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

Seabridge Gold  vs.  AngloGold Ashanti plc

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Seabridge Gold and AngloGold Ashanti

The main advantage of trading using opposite Seabridge Gold and AngloGold Ashanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seabridge Gold 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 Seabridge Gold 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.