Correlation Between Baru Gold and Allegiant Gold

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

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

Diversification Opportunities for Baru Gold and Allegiant Gold

-0.75

Correlation Coefficient

Baru Gold  Allegiant Gold

Pay attention - limited upside

The 3 months correlation between Baru and Allegiant is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Baru Gold Corp and Allegiant Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegiant Gold and Baru 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 Baru Gold Corp are associated (or correlated) with Allegiant Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegiant Gold has no effect on the direction of Baru Gold i.e., Baru Gold and Allegiant Gold go up and down completely randomly.

Pair Corralation between Baru Gold and Allegiant Gold

Assuming the 90 days horizon Baru Gold Corp is expected to generate 2.33 times more return on investment than Allegiant Gold. However, Baru Gold is 2.33 times more volatile than Allegiant Gold. It trades about 0.32 of its potential returns per unit of risk. Allegiant Gold is currently generating about -0.1 per unit of risk. If you would invest  1.09  in Baru Gold Corp on September 13, 2024 and sell it today you would earn a total of  4.80  from holding Baru Gold Corp or generate 440.37% return on investment over 90 days.

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

Baru Gold Corp  vs.  Allegiant Gold

Baru Gold Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baru Gold Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Baru Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Allegiant Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegiant Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Baru Gold and Allegiant Gold

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

The idea behind Baru Gold Corp and Allegiant Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.