Correlation Between Argo Gold and West Red

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

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

Diversification Opportunities for Argo Gold and West Red

0.06

Correlation Coefficient

Argo Gold  West Red

Significant diversification

The 3 months correlation between Argo and West is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Argo Gold and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake and Argo 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 Argo Gold are associated (or correlated) with West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of Argo Gold i.e., Argo Gold and West Red go up and down completely randomly.

Pair Corralation between Argo Gold and West Red

Assuming the 90 days horizon Argo Gold is expected to generate 0.98 times more return on investment than West Red. However, Argo Gold is 1.02 times less risky than West Red. It trades about 0.07 of its potential returns per unit of risk. West Red Lake is currently generating about 0.04 per unit of risk. If you would invest  5.60  in Argo Gold on December 20, 2024 and sell it today you would earn a total of  0.70  from holding Argo Gold or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Argo Gold  vs.  West Red Lake

Argo Gold

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Gold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Argo Gold reported solid returns over the last few months and may actually be approaching a breakup point.

West Red Lake

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in West Red Lake are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, West Red may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Argo Gold and West Red

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

The idea behind Argo Gold and West Red Lake 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.