Correlation Between Nucor Corp and Fortitude Gold

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

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

Diversification Opportunities for Nucor Corp and Fortitude Gold

0.22

Correlation Coefficient

Nucor Corp  Fortitude Gold

Modest diversification

The 3 months correlation between Nucor and Fortitude is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nucor Corp 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 Nucor Corp 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 Nucor Corp 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 Nucor Corp i.e., Nucor Corp and Fortitude Gold go up and down completely randomly.

Pair Corralation between Nucor Corp and Fortitude Gold

Considering the 90-day investment horizon Nucor Corp is expected to under-perform the Fortitude Gold. In addition to that, Nucor Corp is 1.86 times more volatile than Fortitude Gold Corp. It trades about -0.37 of its total potential returns per unit of risk. Fortitude Gold Corp is currently generating about -0.21 per unit of volatility. If you would invest  561.00  in Fortitude Gold Corp on September 17, 2024 and sell it today you would lose (27.00) from holding Fortitude Gold Corp or give up 4.81% of portfolio value over 90 days.

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

Nucor Corp  vs.  Fortitude Gold Corp

Nucor Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Nucor Corp and Fortitude Gold

The main advantage of trading using opposite Nucor Corp and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucor Corp 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 Nucor Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.