Correlation Between BTU Metals and FireFox Gold

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

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

Diversification Opportunities for BTU Metals and FireFox Gold

0.2

Correlation Coefficient

BTU Metals  FireFox Gold

Modest diversification

The 3 months correlation between BTU and FireFox is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BTU Metals Corp and FireFox Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FireFox Gold Corp and BTU Metals 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 BTU Metals Corp are associated (or correlated) with FireFox Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FireFox Gold Corp has no effect on the direction of BTU Metals i.e., BTU Metals and FireFox Gold go up and down completely randomly.

Pair Corralation between BTU Metals and FireFox Gold

Assuming the 90 days horizon BTU Metals is expected to generate 2.06 times less return on investment than FireFox Gold. In addition to that, BTU Metals is 1.13 times more volatile than FireFox Gold Corp. It trades about 0.05 of its total potential returns per unit of risk. FireFox Gold Corp is currently generating about 0.11 per unit of volatility. If you would invest  2.81  in FireFox Gold Corp on May 6, 2025 and sell it today you would earn a total of  1.29  from holding FireFox Gold Corp or generate 45.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

BTU Metals Corp  vs.  FireFox Gold Corp

BTU Metals Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BTU Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, BTU Metals reported solid returns over the last few months and may actually be approaching a breakup point.

FireFox Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FireFox Gold Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FireFox Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BTU Metals and FireFox Gold

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

The idea behind BTU Metals Corp and FireFox 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.