Correlation Between Gold Reserve and Fortitude Gold

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

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

Diversification Opportunities for Gold Reserve and Fortitude Gold

0.05

Correlation Coefficient

Gold Reserve  Fortitude Gold

Significant diversification

The 3 months correlation between Gold and Fortitude is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gold Reserve and Fortitude Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortitude Gold Corp and Gold Reserve 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 Gold Reserve are associated (or correlated) with Fortitude Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortitude Gold Corp has no effect on the direction of Gold Reserve i.e., Gold Reserve and Fortitude Gold go up and down completely randomly.

Pair Corralation between Gold Reserve and Fortitude Gold

Assuming the 90 days horizon Gold Reserve is expected to generate 2.38 times more return on investment than Fortitude Gold. However, Gold Reserve is 2.38 times more volatile than Fortitude Gold Corp. It trades about 0.03 of its potential returns per unit of risk. Fortitude Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  125.00  in Gold Reserve on October 3, 2024 and sell it today you would earn a total of  30.00  from holding Gold Reserve or generate 24.0% return on investment over 90 days.

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

Gold Reserve  vs.  Fortitude Gold Corp

Gold Reserve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold Reserve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Fortitude Gold Corp

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Gold Reserve and Fortitude Gold

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

The idea behind Gold Reserve and Fortitude Gold 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.