Correlation Between Fremont Gold and Independence Gold
Can any of the company-specific risk be diversified away by investing in both Fremont Gold and Independence 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 Fremont Gold and Independence Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fremont Gold and Independence Gold Corp, you can compare the effects of market volatilities on Fremont Gold and Independence 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 Fremont Gold with a short position of Independence Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fremont Gold and Independence Gold.
Diversification Opportunities for Fremont Gold and Independence Gold
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fremont and Independence is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Independence Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Gold Corp and Fremont 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 Fremont Gold are associated (or correlated) with Independence Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Gold Corp has no effect on the direction of Fremont Gold i.e., Fremont Gold and Independence Gold go up and down completely randomly.
Pair Corralation between Fremont Gold and Independence Gold
Assuming the 90 days horizon Fremont Gold is expected to generate 3.17 times more return on investment than Independence Gold. However, Fremont Gold is 3.17 times more volatile than Independence Gold Corp. It trades about -0.03 of its potential returns per unit of risk. Independence Gold Corp is currently generating about -0.15 per unit of risk. If you would invest 11.00 in Fremont Gold on September 1, 2024 and sell it today you would lose (3.05) from holding Fremont Gold or give up 27.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fremont Gold vs. Independence Gold Corp
Performance |
| Timeline |
| Fremont Gold |
| Independence Gold Corp |
Fremont Gold and Independence Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fremont Gold and Independence Gold
The main advantage of trading using opposite Fremont Gold and Independence Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fremont Gold position performs unexpectedly, Independence 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 Independence Gold will offset losses from the drop in Independence Gold's long position.| Fremont Gold vs. Aurion Resources | Fremont Gold vs. Rio2 Limited | Fremont Gold vs. Palamina Corp | Fremont Gold vs. BTU Metals Corp |
| Independence Gold vs. South32 Limited | Independence Gold vs. NioCorp Developments Ltd | Independence Gold vs. HUMANA INC | Independence Gold vs. SCOR PK |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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