Correlation Between New Gold and Alamos Gold
Can any of the company-specific risk be diversified away by investing in both New Gold 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 New Gold and Alamos Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Gold and Alamos Gold, you can compare the effects of market volatilities on New Gold 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 New Gold with a short position of Alamos Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Gold and Alamos Gold.
Diversification Opportunities for New Gold and Alamos Gold
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Alamos is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New Gold and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and New 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 New Gold 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 New Gold i.e., New Gold and Alamos Gold go up and down completely randomly.
Pair Corralation between New Gold and Alamos Gold
Assuming the 90 days trading horizon New Gold is expected to generate 1.39 times more return on investment than Alamos Gold. However, New Gold is 1.39 times more volatile than Alamos Gold. It trades about -0.01 of its potential returns per unit of risk. Alamos Gold is currently generating about -0.2 per unit of risk. If you would invest 404.00 in New Gold on August 24, 2024 and sell it today you would lose (7.00) from holding New Gold or give up 1.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Gold vs. Alamos Gold
Performance |
| Timeline |
| New Gold |
| Alamos Gold |
New Gold and Alamos Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Gold and Alamos Gold
The main advantage of trading using opposite New Gold and Alamos Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Gold 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.| New Gold vs. IAMGold | New Gold vs. Eldorado Gold Corp | New Gold vs. Alamos Gold | New Gold vs. NovaGold Resources |
| Alamos Gold vs. High Liner Foods | Alamos Gold vs. Definity Financial Corp | Alamos Gold vs. Rubicon Organics | Alamos Gold vs. Everyday People Financial |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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