Correlation Between Alamos Gold and Dundee Precious
Can any of the company-specific risk be diversified away by investing in both Alamos Gold and Dundee Precious 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 Alamos Gold and Dundee Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alamos Gold and Dundee Precious Metals, you can compare the effects of market volatilities on Alamos Gold and Dundee Precious 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 Alamos Gold with a short position of Dundee Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamos Gold and Dundee Precious.
Diversification Opportunities for Alamos Gold and Dundee Precious
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alamos and Dundee is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alamos Gold and Dundee Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dundee Precious Metals and Alamos 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 Alamos Gold are associated (or correlated) with Dundee Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dundee Precious Metals has no effect on the direction of Alamos Gold i.e., Alamos Gold and Dundee Precious go up and down completely randomly.
Pair Corralation between Alamos Gold and Dundee Precious
Assuming the 90 days trading horizon Alamos Gold is expected to generate 1.07 times more return on investment than Dundee Precious. However, Alamos Gold is 1.07 times more volatile than Dundee Precious Metals. It trades about 0.11 of its potential returns per unit of risk. Dundee Precious Metals is currently generating about 0.12 per unit of risk. If you would invest 1,717 in Alamos Gold on September 8, 2024 and sell it today you would earn a total of 981.00 from holding Alamos Gold or generate 57.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Alamos Gold vs. Dundee Precious Metals
Performance |
Timeline |
Alamos Gold |
Dundee Precious Metals |
Alamos Gold and Dundee Precious Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alamos Gold and Dundee Precious
The main advantage of trading using opposite Alamos Gold and Dundee Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamos Gold position performs unexpectedly, Dundee Precious 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 Dundee Precious will offset losses from the drop in Dundee Precious' long position.Alamos Gold vs. Cogeco Communications | Alamos Gold vs. Olympia Financial Group | Alamos Gold vs. Champion Iron | Alamos Gold vs. US Financial 15 |
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Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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