Correlation Between Fortitude Gold and ArcelorMittal

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

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

Diversification Opportunities for Fortitude Gold and ArcelorMittal

0.44

Correlation Coefficient

Fortitude Gold  ArcelorMittal

Very weak diversification

The 3 months correlation between Fortitude and ArcelorMittal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and ArcelorMittal SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcelorMittal SA ADR and Fortitude 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 Fortitude Gold Corp are associated (or correlated) with ArcelorMittal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcelorMittal SA ADR has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and ArcelorMittal go up and down completely randomly.

Pair Corralation between Fortitude Gold and ArcelorMittal

Given the investment horizon of 90 days Fortitude Gold is expected to generate 5.03 times less return on investment than ArcelorMittal. But when comparing it to its historical volatility, Fortitude Gold Corp is 1.18 times less risky than ArcelorMittal. It trades about 0.01 of its potential returns per unit of risk. ArcelorMittal SA ADR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,449  in ArcelorMittal SA ADR on September 15, 2024 and sell it today you would earn a total of  22.00  from holding ArcelorMittal SA ADR or generate 0.9% return on investment over 90 days.

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

Fortitude Gold Corp  vs.  ArcelorMittal SA ADR

Fortitude Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Fortitude Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

ArcelorMittal SA ADR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ArcelorMittal SA ADR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ArcelorMittal may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fortitude Gold and ArcelorMittal

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

The idea behind Fortitude Gold Corp and ArcelorMittal SA ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.