Correlation Between Fortitude Gold and Nucor Corp

Can any of the company-specific risk be diversified away by investing in both Fortitude Gold and Nucor Corp 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 Nucor Corp 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 Nucor Corp, you can compare the effects of market volatilities on Fortitude Gold and Nucor Corp 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 Nucor Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortitude Gold and Nucor Corp.

Diversification Opportunities for Fortitude Gold and Nucor Corp

0.46

Correlation Coefficient

Fortitude Gold  Nucor Corp

Very weak diversification

The 3 months correlation between Fortitude and Nucor is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Nucor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucor Corp 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 Nucor Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucor Corp has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Nucor Corp go up and down completely randomly.

Pair Corralation between Fortitude Gold and Nucor Corp

Given the investment horizon of 90 days Fortitude Gold is expected to generate 9.47 times less return on investment than Nucor Corp. But when comparing it to its historical volatility, Fortitude Gold Corp is 1.09 times less risky than Nucor Corp. It trades about 0.01 of its potential returns per unit of risk. Nucor Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,531  in Nucor Corp on December 28, 2024 and sell it today you would earn a total of  1,216  from holding Nucor Corp or generate 10.55% 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.  Nucor Corp

Fortitude Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortitude Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fortitude Gold is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Nucor Corp

Risk-Adjusted Performance

Modest

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

Pair Trading with Fortitude Gold and Nucor Corp

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

The idea behind Fortitude Gold Corp and Nucor Corp 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.