Correlation Between Fortitude Gold and Freeport McMoran

Can any of the company-specific risk be diversified away by investing in both Fortitude Gold and Freeport McMoran 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 Freeport McMoran 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 Freeport McMoran Copper Gold, you can compare the effects of market volatilities on Fortitude Gold and Freeport McMoran 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 Freeport McMoran. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortitude Gold and Freeport McMoran.

Diversification Opportunities for Fortitude Gold and Freeport McMoran

-0.01

Correlation Coefficient

Fortitude Gold  Freeport McMoran

Good diversification

The 3 months correlation between Fortitude and Freeport is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Freeport McMoran Copper Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoran Copper 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 Freeport McMoran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoran Copper has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Freeport McMoran go up and down completely randomly.

Pair Corralation between Fortitude Gold and Freeport McMoran

Given the investment horizon of 90 days Fortitude Gold Corp is expected to generate 0.98 times more return on investment than Freeport McMoran. However, Fortitude Gold Corp is 1.03 times less risky than Freeport McMoran. It trades about 0.15 of its potential returns per unit of risk. Freeport McMoran Copper Gold is currently generating about -0.01 per unit of risk. 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	98.46%
Values	Daily Returns

Fortitude Gold Corp  vs.  Freeport McMoran Copper Gold

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.

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.

Pair Trading with Fortitude Gold and Freeport McMoran

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

The idea behind Fortitude Gold Corp and Freeport McMoran Copper Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.