Correlation Between Fremont Gold and Canada Nickel

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

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

Diversification Opportunities for Fremont Gold and Canada Nickel

0.29

Correlation Coefficient

Fremont Gold  Canada Nickel

Modest diversification

The 3 months correlation between Fremont and Canada is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel and Fremont 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 Fremont Gold are associated (or correlated) with Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Fremont Gold i.e., Fremont Gold and Canada Nickel go up and down completely randomly.

Pair Corralation between Fremont Gold and Canada Nickel

Assuming the 90 days horizon Fremont Gold is expected to generate 4.31 times more return on investment than Canada Nickel. However, Fremont Gold is 4.31 times more volatile than Canada Nickel. It trades about 0.01 of its potential returns per unit of risk. Canada Nickel is currently generating about -0.2 per unit of risk. If you would invest  12.00  in Fremont Gold on October 26, 2024 and sell it today you would lose (1.00) from holding Fremont Gold or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	73.17%
Values	Daily Returns

Fremont Gold  vs.  Canada Nickel

Fremont Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fremont Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fremont Gold is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canada Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Fremont Gold and Canada Nickel

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

The idea behind Fremont Gold and Canada Nickel 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.