Correlation Between Fortitude Gold and Gold Fields
Can any of the company-specific risk be diversified away by investing in both Fortitude Gold and Gold Fields 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 Fortitude Gold and Gold Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortitude Gold Corp and Gold Fields Ltd, you can compare the effects of market volatilities on Fortitude Gold and Gold Fields 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 Fortitude Gold with a short position of Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortitude Gold and Gold Fields.
Diversification Opportunities for Fortitude Gold and Gold Fields
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortitude and Gold is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and Fortitude 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 Fortitude Gold Corp are associated (or correlated) with Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Gold Fields go up and down completely randomly.
Pair Corralation between Fortitude Gold and Gold Fields
Given the investment horizon of 90 days Fortitude Gold is expected to generate 2.9 times less return on investment than Gold Fields. But when comparing it to its historical volatility, Fortitude Gold Corp is 1.48 times less risky than Gold Fields. It trades about 0.02 of its potential returns per unit of risk. Gold Fields Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,018 in Gold Fields Ltd on August 30, 2024 and sell it today you would earn a total of 438.00 from holding Gold Fields Ltd or generate 43.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortitude Gold Corp vs. Gold Fields Ltd
Performance |
| Timeline |
| Fortitude Gold Corp |
| Gold Fields |
Fortitude Gold and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortitude Gold and Gold Fields
The main advantage of trading using opposite Fortitude Gold and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortitude Gold position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' long position.| Fortitude Gold vs. Vertiv Holdings Co | Fortitude Gold vs. Nasdaq Inc | Fortitude Gold vs. McDonalds | Fortitude Gold vs. Walmart |
| Gold Fields vs. Agnico Eagle Mines | Gold Fields vs. Kinross Gold | Gold Fields vs. Harmony Gold Mining | Gold Fields vs. Franco Nevada |
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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