Correlation Between Fury Gold and Compass Minerals

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

By analyzing existing cross correlation between Fury Gold Mines and Compass Minerals International, you can compare the effects of market volatilities on Fury Gold and Compass Minerals 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 Fury Gold with a short position of Compass Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fury Gold and Compass Minerals.

Diversification Opportunities for Fury Gold and Compass Minerals

0.12

Correlation Coefficient

Fury Gold  Compass Minerals

Average diversification

The 3 months correlation between Fury and Compass is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fury Gold Mines and Compass Minerals International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Minerals Int and Fury 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 Fury Gold Mines are associated (or correlated) with Compass Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Minerals Int has no effect on the direction of Fury Gold i.e., Fury Gold and Compass Minerals go up and down completely randomly.

Pair Corralation between Fury Gold and Compass Minerals

Given the investment horizon of 90 days Fury Gold Mines is expected to generate 1.16 times more return on investment than Compass Minerals. However, Fury Gold is 1.16 times more volatile than Compass Minerals International. It trades about 0.03 of its potential returns per unit of risk. Compass Minerals International is currently generating about -0.05 per unit of risk. If you would invest  37.00  in Fury Gold Mines on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Fury Gold Mines or generate 10.81% return on investment over 90 days.

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

Fury Gold Mines  vs.  Compass Minerals International

Fury Gold Mines

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fury Gold Mines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Fury Gold is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Compass Minerals Int

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compass Minerals International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Compass Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fury Gold and Compass Minerals

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

The idea behind Fury Gold Mines and Compass Minerals International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.