Correlation Between Freeport McMoran and Fortitude Gold

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

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

Diversification Opportunities for Freeport McMoran and Fortitude Gold

-0.01

Correlation Coefficient

Freeport McMoran  Fortitude Gold

Good diversification

The 3 months correlation between Freeport and Fortitude is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoran Copper Gold 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 Freeport McMoran 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 Freeport McMoran Copper Gold 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 Freeport McMoran i.e., Freeport McMoran and Fortitude Gold go up and down completely randomly.

Pair Corralation between Freeport McMoran and Fortitude Gold

Considering the 90-day investment horizon Freeport McMoran Copper Gold is expected to under-perform the Fortitude Gold. In addition to that, Freeport McMoran is 1.03 times more volatile than Fortitude Gold Corp. It trades about -0.01 of its total potential returns per unit of risk. Fortitude Gold Corp is currently generating about 0.15 per unit of volatility. If you would invest  440.00  in Fortitude Gold Corp on September 17, 2024 and sell it today you would earn a total of  94.00  from holding Fortitude Gold Corp or generate 21.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Freeport McMoran Copper Gold  vs.  Fortitude Gold Corp

Freeport McMoran Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoran Copper Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Freeport McMoran is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 Freeport McMoran and Fortitude Gold

The main advantage of trading using opposite Freeport McMoran and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoran 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 Freeport McMoran Copper Gold 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.