Correlation Between Fortitude Gold and Gerdau SA
Can any of the company-specific risk be diversified away by investing in both Fortitude Gold and Gerdau SA 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 Gerdau SA 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 Gerdau SA ADR, you can compare the effects of market volatilities on Fortitude Gold and Gerdau SA 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 Gerdau SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortitude Gold and Gerdau SA.
Diversification Opportunities for Fortitude Gold and Gerdau SA
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fortitude and Gerdau is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Gerdau SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerdau SA ADR 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 Gerdau SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerdau SA ADR has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Gerdau SA go up and down completely randomly.
Pair Corralation between Fortitude Gold and Gerdau SA
Given the investment horizon of 90 days Fortitude Gold Corp is expected to under-perform the Gerdau SA. But the otc stock apears to be less risky and, when comparing its historical volatility, Fortitude Gold Corp is 1.49 times less risky than Gerdau SA. The otc stock trades about -0.02 of its potential returns per unit of risk. The Gerdau SA ADR is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 318.00 in Gerdau SA ADR on August 30, 2024 and sell it today you would earn a total of 23.00 from holding Gerdau SA ADR or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fortitude Gold Corp vs. Gerdau SA ADR
Performance |
| Timeline |
| Fortitude Gold Corp |
| Gerdau SA ADR |
Fortitude Gold and Gerdau SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortitude Gold and Gerdau SA
The main advantage of trading using opposite Fortitude Gold and Gerdau SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortitude Gold position performs unexpectedly, Gerdau SA 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 Gerdau SA will offset losses from the drop in Gerdau SA's long position.| Fortitude Gold vs. Generationome Properties | Fortitude Gold vs. Gold Resource | Fortitude Gold vs. PermRock Royalty Trust | Fortitude Gold vs. Ellington Residential Mortgage |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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