Correlation Between BluMetric Environmental and Alamos Gold

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

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

Diversification Opportunities for BluMetric Environmental and Alamos Gold

0.43

Correlation Coefficient

BluMetric Environmental  Alamos Gold

Very weak diversification

The 3 months correlation between BluMetric and Alamos is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BluMetric Environmental and Alamos Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamos Gold and BluMetric Environmental 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 BluMetric Environmental 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 BluMetric Environmental i.e., BluMetric Environmental and Alamos Gold go up and down completely randomly.

Pair Corralation between BluMetric Environmental and Alamos Gold

Assuming the 90 days horizon BluMetric Environmental is expected to generate 2.33 times more return on investment than Alamos Gold. However, BluMetric Environmental is 2.33 times more volatile than Alamos Gold. It trades about 0.14 of its potential returns per unit of risk. Alamos Gold is currently generating about 0.32 per unit of risk. If you would invest  83.00  in BluMetric Environmental on December 30, 2024 and sell it today you would earn a total of  35.00  from holding BluMetric Environmental or generate 42.17% return on investment over 90 days.

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

BluMetric Environmental  vs.  Alamos Gold

BluMetric Environmental

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BluMetric Environmental are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, BluMetric Environmental showed solid returns over the last few months and may actually be approaching a breakup point.

Alamos Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alamos Gold are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Alamos Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BluMetric Environmental and Alamos Gold

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

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.