Correlation Between AngloGold Ashanti and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both AngloGold Ashanti and Eldorado 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 AngloGold Ashanti and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AngloGold Ashanti plc and Eldorado Gold Corp, you can compare the effects of market volatilities on AngloGold Ashanti and Eldorado 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 AngloGold Ashanti with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of AngloGold Ashanti and Eldorado Gold.
Diversification Opportunities for AngloGold Ashanti and Eldorado Gold
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AngloGold and Eldorado is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AngloGold Ashanti plc and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and AngloGold Ashanti 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 AngloGold Ashanti plc are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of AngloGold Ashanti i.e., AngloGold Ashanti and Eldorado Gold go up and down completely randomly.
Pair Corralation between AngloGold Ashanti and Eldorado Gold
Allowing for the 90-day total investment horizon AngloGold Ashanti is expected to generate 1.24 times less return on investment than Eldorado Gold. In addition to that, AngloGold Ashanti is 1.18 times more volatile than Eldorado Gold Corp. It trades about 0.08 of its total potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.12 per unit of volatility. If you would invest 1,039 in Eldorado Gold Corp on August 27, 2024 and sell it today you would earn a total of 617.00 from holding Eldorado Gold Corp or generate 59.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AngloGold Ashanti plc vs. Eldorado Gold Corp
Performance |
| Timeline |
| AngloGold Ashanti plc |
| Eldorado Gold Corp |
AngloGold Ashanti and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AngloGold Ashanti and Eldorado Gold
The main advantage of trading using opposite AngloGold Ashanti and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AngloGold Ashanti position performs unexpectedly, Eldorado 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 Eldorado Gold will offset losses from the drop in Eldorado Gold's long position.| AngloGold Ashanti vs. Harmony Gold Mining | AngloGold Ashanti vs. Eldorado Gold Corp | AngloGold Ashanti vs. Kinross Gold | AngloGold Ashanti vs. Pan American Silver |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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