Correlation Between Cleveland Cliffs and Fortitude Gold

Can any of the company-specific risk be diversified away by investing in both Cleveland Cliffs and Fortitude 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 Cleveland Cliffs and Fortitude Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cleveland Cliffs and Fortitude Gold Corp, you can compare the effects of market volatilities on Cleveland Cliffs and Fortitude 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 Cleveland Cliffs with a short position of Fortitude Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleveland Cliffs and Fortitude Gold.

Diversification Opportunities for Cleveland Cliffs and Fortitude Gold

0.21

Correlation Coefficient

Cleveland Cliffs  Fortitude Gold

Modest diversification

The 3 months correlation between Cleveland and Fortitude is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cleveland Cliffs and Fortitude Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortitude Gold Corp and Cleveland Cliffs 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 Cleveland Cliffs are associated (or correlated) with Fortitude Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortitude Gold Corp has no effect on the direction of Cleveland Cliffs i.e., Cleveland Cliffs and Fortitude Gold go up and down completely randomly.

Pair Corralation between Cleveland Cliffs and Fortitude Gold

Considering the 90-day investment horizon Cleveland Cliffs is expected to under-perform the Fortitude Gold. In addition to that, Cleveland Cliffs is 2.02 times more volatile than Fortitude Gold Corp. It trades about -0.1 of its total potential returns per unit of risk. Fortitude Gold Corp is currently generating about 0.01 per unit of volatility. If you would invest  534.00  in Fortitude Gold Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Fortitude Gold Corp or generate 0.0% return on investment over 90 days.

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

Cleveland Cliffs  vs.  Fortitude Gold Corp

Cleveland Cliffs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleveland Cliffs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fortitude Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Fortitude Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleveland Cliffs and Fortitude Gold

The main advantage of trading using opposite Cleveland Cliffs and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleveland Cliffs position performs unexpectedly, Fortitude 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 Fortitude Gold will offset losses from the drop in Fortitude Gold's long position.

The idea behind Cleveland Cliffs and Fortitude Gold Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.