Correlation Between Seabridge Gold and FMC
Can any of the company-specific risk be diversified away by investing in both Seabridge Gold and FMC 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 Seabridge Gold and FMC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seabridge Gold and FMC Corporation, you can compare the effects of market volatilities on Seabridge Gold and FMC 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 Seabridge Gold with a short position of FMC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seabridge Gold and FMC.
Diversification Opportunities for Seabridge Gold and FMC
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seabridge and FMC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Seabridge Gold and FMC Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FMC Corporation and Seabridge 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 Seabridge Gold are associated (or correlated) with FMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FMC Corporation has no effect on the direction of Seabridge Gold i.e., Seabridge Gold and FMC go up and down completely randomly.
Pair Corralation between Seabridge Gold and FMC
Allowing for the 90-day total investment horizon Seabridge Gold is expected to generate 0.92 times more return on investment than FMC. However, Seabridge Gold is 1.09 times less risky than FMC. It trades about 0.04 of its potential returns per unit of risk. FMC Corporation is currently generating about -0.03 per unit of risk. If you would invest 1,081 in Seabridge Gold on November 9, 2024 and sell it today you would earn a total of 211.00 from holding Seabridge Gold or generate 19.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seabridge Gold vs. FMC Corp.
Performance |
| Timeline |
| Seabridge Gold |
| FMC Corporation |
Seabridge Gold and FMC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seabridge Gold and FMC
The main advantage of trading using opposite Seabridge Gold and FMC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seabridge Gold position performs unexpectedly, FMC 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 FMC will offset losses from the drop in FMC's long position.| Seabridge Gold vs. Franco Nevada | Seabridge Gold vs. Wheaton Precious Metals | Seabridge Gold vs. Osisko Gold Ro | Seabridge Gold vs. Sandstorm Gold Ltd |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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