Correlation Between Golden Arrow and Almaden Minerals

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

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

Diversification Opportunities for Golden Arrow and Almaden Minerals

-0.49

Correlation Coefficient

Golden Arrow  Almaden Minerals

Very good diversification

The 3 months correlation between Golden and Almaden is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Golden Arrow Resources and Almaden Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almaden Minerals and Golden Arrow 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 Golden Arrow Resources 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 Golden Arrow i.e., Golden Arrow and Almaden Minerals go up and down completely randomly.

Pair Corralation between Golden Arrow and Almaden Minerals

Assuming the 90 days horizon Golden Arrow is expected to generate 2.49 times less return on investment than Almaden Minerals. But when comparing it to its historical volatility, Golden Arrow Resources is 1.32 times less risky than Almaden Minerals. It trades about 0.03 of its potential returns per unit of risk. Almaden Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Almaden Minerals on September 13, 2024 and sell it today you would earn a total of  0.50  from holding Almaden Minerals or generate 10.0% return on investment over 90 days.

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

Golden Arrow Resources  vs.  Almaden Minerals

Golden Arrow Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Arrow Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Golden Arrow may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Almaden Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Almaden Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Almaden Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Arrow and Almaden Minerals

The main advantage of trading using opposite Golden Arrow and Almaden Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Arrow 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 Golden Arrow Resources 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.