Correlation Between Kaiser Aluminum and Fortitude Gold

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

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

Diversification Opportunities for Kaiser Aluminum and Fortitude Gold

0.54

Correlation Coefficient

Kaiser Aluminum  Fortitude Gold

Very weak diversification

The 3 months correlation between Kaiser and Fortitude is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum 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 Kaiser Aluminum i.e., Kaiser Aluminum and Fortitude Gold go up and down completely randomly.

Pair Corralation between Kaiser Aluminum and Fortitude Gold

Given the investment horizon of 90 days Kaiser Aluminum is expected to generate 0.68 times more return on investment than Fortitude Gold. However, Kaiser Aluminum is 1.48 times less risky than Fortitude Gold. It trades about 0.34 of its potential returns per unit of risk. Fortitude Gold Corp is currently generating about 0.15 per unit of risk. If you would invest  6,936  in Kaiser Aluminum on October 20, 2024 and sell it today you would earn a total of  432.00  from holding Kaiser Aluminum or generate 6.23% return on investment over 90 days.

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

Kaiser Aluminum  vs.  Fortitude Gold Corp

Kaiser Aluminum

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kaiser Aluminum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Kaiser Aluminum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Kaiser Aluminum and Fortitude Gold

The main advantage of trading using opposite Kaiser Aluminum and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kaiser Aluminum 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 Kaiser Aluminum 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.