Correlation Between Fortitude Gold and Olympic Steel

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

Diversification Opportunities for Fortitude Gold and Olympic Steel

0.71

Correlation Coefficient

Fortitude Gold  Olympic Steel

Poor diversification

The 3 months correlation between Fortitude and Olympic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Olympic Steel go up and down completely randomly.

Pair Corralation between Fortitude Gold and Olympic Steel

Given the investment horizon of 90 days Fortitude Gold is expected to generate 1.05 times less return on investment than Olympic Steel. But when comparing it to its historical volatility, Fortitude Gold Corp is 1.25 times less risky than Olympic Steel. It trades about 0.02 of its potential returns per unit of risk. Olympic Steel is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,250  in Olympic Steel on December 27, 2024 and sell it today you would earn a total of  14.00  from holding Olympic Steel or generate 0.43% return on investment over 90 days.

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

Fortitude Gold Corp  vs.  Olympic Steel

Fortitude Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Olympic Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olympic Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Olympic Steel is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fortitude Gold and Olympic Steel

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

The idea behind Fortitude Gold Corp and Olympic Steel 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..