Correlation Between Fremont Gold and Starr Peak

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Can any of the company-specific risk be diversified away by investing in both Fremont Gold and Starr Peak 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 Starr Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fremont Gold and Starr Peak Exploration, you can compare the effects of market volatilities on Fremont Gold and Starr Peak 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 Starr Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fremont Gold and Starr Peak.

Diversification Opportunities for Fremont Gold and Starr Peak

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fremont and Starr is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and Starr Peak Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starr Peak Exploration 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 Starr Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starr Peak Exploration has no effect on the direction of Fremont Gold i.e., Fremont Gold and Starr Peak go up and down completely randomly.

Pair Corralation between Fremont Gold and Starr Peak

Assuming the 90 days horizon Fremont Gold is expected to generate 3.22 times more return on investment than Starr Peak. However, Fremont Gold is 3.22 times more volatile than Starr Peak Exploration. It trades about 0.18 of its potential returns per unit of risk. Starr Peak Exploration is currently generating about 0.02 per unit of risk. If you would invest  9.50  in Fremont Gold on October 25, 2024 and sell it today you would earn a total of  1.50  from holding Fremont Gold or generate 15.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy47.37%
ValuesDaily Returns

Fremont Gold  vs.  Starr Peak Exploration

 Performance 
       Timeline  
Fremont Gold 

Risk-Adjusted Performance

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Weak
 
Strong
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 February 2025.
Starr Peak Exploration 

Risk-Adjusted Performance

0 of 100

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

Fremont Gold and Starr Peak Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fremont Gold and Starr Peak

The main advantage of trading using opposite Fremont Gold and Starr Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fremont Gold position performs unexpectedly, Starr Peak 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 Starr Peak will offset losses from the drop in Starr Peak's long position.
The idea behind Fremont Gold and Starr Peak Exploration 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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