Correlation Between Fremont Gold and Seabridge Gold

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

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

Diversification Opportunities for Fremont Gold and Seabridge Gold

-0.24

Correlation Coefficient

Fremont Gold  Seabridge Gold

Very good diversification

The 3 months correlation between Fremont and Seabridge is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Seabridge Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seabridge Gold 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 Seabridge Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seabridge Gold has no effect on the direction of Fremont Gold i.e., Fremont Gold and Seabridge Gold go up and down completely randomly.

Pair Corralation between Fremont Gold and Seabridge Gold

Assuming the 90 days horizon Fremont Gold is expected to generate 3.24 times more return on investment than Seabridge Gold. However, Fremont Gold is 3.24 times more volatile than Seabridge Gold. It trades about 0.01 of its potential returns per unit of risk. Seabridge Gold is currently generating about -0.04 per unit of risk. If you would invest  12.00  in Fremont Gold on September 4, 2024 and sell it today you would lose (2.00) from holding Fremont Gold or give up 16.67% of portfolio value over 90 days.

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

Fremont Gold  vs.  Seabridge Gold

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 weak basic indicators, Fremont Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Seabridge Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seabridge Gold 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Fremont Gold and Seabridge Gold

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

The idea behind Fremont Gold and Seabridge 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.