Correlation Between Fremont Gold and IShares SPTSX

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

By analyzing existing cross correlation between Fremont Gold and iShares SPTSX Capped, you can compare the effects of market volatilities on Fremont Gold and IShares SPTSX 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 IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fremont Gold and IShares SPTSX.

Diversification Opportunities for Fremont Gold and IShares SPTSX

0.28

Correlation Coefficient

Fremont Gold  IShares SPTSX

Modest diversification

The 3 months correlation between Fremont and IShares is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fremont Gold and iShares SPTSX Capped in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Capped 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 IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Capped has no effect on the direction of Fremont Gold i.e., Fremont Gold and IShares SPTSX go up and down completely randomly.

Pair Corralation between Fremont Gold and IShares SPTSX

Assuming the 90 days horizon Fremont Gold is expected to generate 5.1 times more return on investment than IShares SPTSX. However, Fremont Gold is 5.1 times more volatile than iShares SPTSX Capped. It trades about 0.02 of its potential returns per unit of risk. iShares SPTSX Capped is currently generating about 0.05 per unit of risk. If you would invest  14.00  in Fremont Gold on October 24, 2024 and sell it today you would lose (3.00) from holding Fremont Gold or give up 21.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.57%
Values	Daily Returns

Fremont Gold  vs.  iShares SPTSX Capped

Fremont Gold

Risk-Adjusted Performance

0 of 100

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.

iShares SPTSX Capped

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares SPTSX Capped are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares SPTSX is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fremont Gold and IShares SPTSX

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

The idea behind Fremont Gold and iShares SPTSX Capped 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.