Correlation Between Dundee Precious and Alamos Gold
Can any of the company-specific risk be diversified away by investing in both Dundee Precious and Alamos 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 Dundee Precious and Alamos Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dundee Precious Metals and Alamos Gold, you can compare the effects of market volatilities on Dundee Precious and Alamos 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 Dundee Precious with a short position of Alamos Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dundee Precious and Alamos Gold.
Diversification Opportunities for Dundee Precious and Alamos Gold
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dundee and Alamos is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dundee Precious Metals and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and Dundee 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 Dundee Precious Metals are associated (or correlated) with Alamos Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamos Gold has no effect on the direction of Dundee Precious i.e., Dundee Precious and Alamos Gold go up and down completely randomly.
Pair Corralation between Dundee Precious and Alamos Gold
Assuming the 90 days trading horizon Dundee Precious Metals is expected to generate 0.87 times more return on investment than Alamos Gold. However, Dundee Precious Metals is 1.15 times less risky than Alamos Gold. It trades about -0.16 of its potential returns per unit of risk. Alamos Gold is currently generating about -0.19 per unit of risk. If you would invest 1,400 in Dundee Precious Metals on August 29, 2024 and sell it today you would lose (96.00) from holding Dundee Precious Metals or give up 6.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dundee Precious Metals vs. Alamos Gold
Performance |
| Timeline |
| Dundee Precious Metals |
| Alamos Gold |
Dundee Precious and Alamos Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dundee Precious and Alamos Gold
The main advantage of trading using opposite Dundee Precious and Alamos Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dundee Precious position performs unexpectedly, Alamos 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 Alamos Gold will offset losses from the drop in Alamos Gold's long position.The idea behind Dundee Precious Metals and Alamos 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.| Alamos Gold vs. Advent Wireless | Alamos Gold vs. Information Services | Alamos Gold vs. Verizon Communications CDR | Alamos Gold vs. Cogeco Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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