Correlation Between Fortitude Gold and Constellium

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

Diversification Opportunities for Fortitude Gold and Constellium

0.56

Correlation Coefficient

Fortitude Gold  Constellium

Very weak diversification

The 3 months correlation between Fortitude and Constellium is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and Constellium Nv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Constellium Nv 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 Constellium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Constellium Nv has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and Constellium go up and down completely randomly.

Pair Corralation between Fortitude Gold and Constellium

Given the investment horizon of 90 days Fortitude Gold Corp is expected to generate 1.6 times more return on investment than Constellium. However, Fortitude Gold is 1.6 times more volatile than Constellium Nv. It trades about -0.07 of its potential returns per unit of risk. Constellium Nv is currently generating about -0.16 per unit of risk. If you would invest  524.00  in Fortitude Gold Corp on February 6, 2024 and sell it today you would lose (32.00) from holding Fortitude Gold Corp or give up 6.11% of portfolio value over 90 days.

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

Fortitude Gold Corp  vs.  Constellium Nv

Fortitude Gold Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Fortitude Gold may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Constellium Nv

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Constellium Nv are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Constellium may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Fortitude Gold and Constellium

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

The idea behind Fortitude Gold Corp and Constellium Nv 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 Anywhere module to track or share privately all of your investments from the convenience of any device.