Correlation Between Fortitude Gold and IAMGold

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

Diversification Opportunities for Fortitude Gold and IAMGold

0.45

Correlation Coefficient

Fortitude Gold  IAMGold

Very weak diversification

The 3 months correlation between Fortitude and IAMGold is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fortitude Gold Corp and IAMGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAMGold 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 IAMGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAMGold has no effect on the direction of Fortitude Gold i.e., Fortitude Gold and IAMGold go up and down completely randomly.

Pair Corralation between Fortitude Gold and IAMGold

Given the investment horizon of 90 days Fortitude Gold is expected to generate 17.31 times less return on investment than IAMGold. But when comparing it to its historical volatility, Fortitude Gold Corp is 1.8 times less risky than IAMGold. It trades about 0.01 of its potential returns per unit of risk. IAMGold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  547.00  in IAMGold on January 12, 2025 and sell it today you would earn a total of  175.00  from holding IAMGold or generate 31.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Fortitude Gold Corp  vs.  IAMGold

Fortitude Gold Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortitude Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Fortitude Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IAMGold

Risk-Adjusted Performance

OK

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

Pair Trading with Fortitude Gold and IAMGold

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

The idea behind Fortitude Gold Corp and IAMGold 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.