Correlation Between Dakota Gold and Alamos Gold

Can any of the company-specific risk be diversified away by investing in both Dakota 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 Dakota 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 Dakota Gold Corp and Alamos Gold, you can compare the effects of market volatilities on Dakota 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 Dakota Gold with a short position of Alamos Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dakota Gold and Alamos Gold.

Diversification Opportunities for Dakota Gold and Alamos Gold

0.89

Correlation Coefficient

Dakota Gold  Alamos Gold

Very poor diversification

The 3 months correlation between Dakota and Alamos is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dakota Gold Corp and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and Dakota 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 Dakota Gold Corp 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 Dakota Gold i.e., Dakota Gold and Alamos Gold go up and down completely randomly.

Pair Corralation between Dakota Gold and Alamos Gold

Allowing for the 90-day total investment horizon Dakota Gold Corp is expected to generate 2.36 times more return on investment than Alamos Gold. However, Dakota Gold is 2.36 times more volatile than Alamos Gold. It trades about 0.15 of its potential returns per unit of risk. Alamos Gold is currently generating about 0.19 per unit of risk. If you would invest  237.00  in Dakota Gold Corp on March 1, 2024 and sell it today you would earn a total of  68.00  from holding Dakota Gold Corp or generate 28.69% return on investment over 90 days.

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

Dakota Gold Corp  vs.  Alamos Gold

Dakota Gold Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Dakota Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alamos Gold

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alamos Gold are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, Alamos Gold demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dakota Gold and Alamos Gold

The main advantage of trading using opposite Dakota Gold and Alamos Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dakota 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.

The idea behind Dakota Gold Corp 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.