Correlation Between Alamos Gold and B2Gold Corp

Can any of the company-specific risk be diversified away by investing in both Alamos Gold and B2Gold Corp 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 B2Gold Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alamos Gold and B2Gold Corp, you can compare the effects of market volatilities on Alamos Gold and B2Gold Corp 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 B2Gold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alamos Gold and B2Gold Corp.

Diversification Opportunities for Alamos Gold and B2Gold Corp

0.85

Correlation Coefficient

Alamos Gold  B2Gold Corp

Very poor diversification

The 3 months correlation between Alamos and B2Gold is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alamos Gold and B2Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B2Gold Corp 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 B2Gold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B2Gold Corp has no effect on the direction of Alamos Gold i.e., Alamos Gold and B2Gold Corp go up and down completely randomly.

Pair Corralation between Alamos Gold and B2Gold Corp

Considering the 90-day investment horizon Alamos Gold is expected to generate 0.83 times more return on investment than B2Gold Corp. However, Alamos Gold is 1.21 times less risky than B2Gold Corp. It trades about 0.0 of its potential returns per unit of risk. B2Gold Corp is currently generating about -0.06 per unit of risk. If you would invest  2,066  in Alamos Gold on September 13, 2024 and sell it today you would lose (28.00) from holding Alamos Gold or give up 1.36% of portfolio value over 90 days.

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

Alamos Gold  vs.  B2Gold Corp

Alamos Gold

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Alamos Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Alamos Gold is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

B2Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B2Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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 Alamos Gold and B2Gold Corp

The main advantage of trading using opposite Alamos Gold and B2Gold Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alamos Gold position performs unexpectedly, B2Gold Corp 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 B2Gold Corp will offset losses from the drop in B2Gold Corp's long position.

The idea behind Alamos Gold and B2Gold Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.