Correlation Between GoldMining and Fulcrum Metals

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

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

Diversification Opportunities for GoldMining and Fulcrum Metals

0.05

Correlation Coefficient

GoldMining  Fulcrum Metals

Significant diversification

The 3 months correlation between GoldMining and Fulcrum is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Fulcrum Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Metals PLC and GoldMining 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 GoldMining are associated (or correlated) with Fulcrum Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Metals PLC has no effect on the direction of GoldMining i.e., GoldMining and Fulcrum Metals go up and down completely randomly.

Pair Corralation between GoldMining and Fulcrum Metals

Assuming the 90 days trading horizon GoldMining is expected to generate 2.02 times more return on investment than Fulcrum Metals. However, GoldMining is 2.02 times more volatile than Fulcrum Metals PLC. It trades about -0.03 of its potential returns per unit of risk. Fulcrum Metals PLC is currently generating about -0.08 per unit of risk. If you would invest  170.00  in GoldMining on October 3, 2024 and sell it today you would lose (53.00) from holding GoldMining or give up 31.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.79%
Values	Daily Returns

GoldMining  vs.  Fulcrum Metals PLC

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Fulcrum Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fulcrum Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GoldMining and Fulcrum Metals

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

The idea behind GoldMining and Fulcrum Metals PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..