Correlation Between Big Ridge and Almaden Minerals

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

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

Diversification Opportunities for Big Ridge and Almaden Minerals

0.01

Correlation Coefficient

Big Ridge  Almaden Minerals

Significant diversification

The 3 months correlation between Big and Almaden is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Big Ridge Gold and Almaden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almaden Minerals and Big Ridge 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 Big Ridge Gold are associated (or correlated) with Almaden Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almaden Minerals has no effect on the direction of Big Ridge i.e., Big Ridge and Almaden Minerals go up and down completely randomly.

Pair Corralation between Big Ridge and Almaden Minerals

If you would invest  4.00  in Big Ridge Gold on September 2, 2024 and sell it today you would earn a total of  3.00  from holding Big Ridge Gold or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Big Ridge Gold  vs.  Almaden Minerals

Big Ridge Gold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Big Ridge Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Big Ridge reported solid returns over the last few months and may actually be approaching a breakup point.

Almaden Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almaden Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Almaden Minerals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Big Ridge and Almaden Minerals

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

The idea behind Big Ridge Gold and Almaden Minerals 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.