Correlation Between Worthington Steel and Fortitude Gold

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

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

Diversification Opportunities for Worthington Steel and Fortitude Gold

0.58

Correlation Coefficient

Worthington Steel  Fortitude Gold

Very weak diversification

The 3 months correlation between Worthington and Fortitude is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel 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 Worthington Steel 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 Worthington Steel 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 Worthington Steel i.e., Worthington Steel and Fortitude Gold go up and down completely randomly.

Pair Corralation between Worthington Steel and Fortitude Gold

Allowing for the 90-day total investment horizon Worthington Steel is expected to generate 1.46 times more return on investment than Fortitude Gold. However, Worthington Steel is 1.46 times more volatile than Fortitude Gold Corp. It trades about 0.14 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  3,301  in Worthington Steel on September 15, 2024 and sell it today you would earn a total of  911.00  from holding Worthington Steel or generate 27.6% return on investment over 90 days.

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

Worthington Steel  vs.  Fortitude Gold Corp

Worthington Steel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Worthington Steel are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Worthington Steel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fortitude Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Fortitude Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worthington Steel and Fortitude Gold

The main advantage of trading using opposite Worthington Steel and Fortitude Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worthington Steel 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 Worthington Steel 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.