Correlation Between Constellium and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Constellium 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 Constellium and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellium Nv and Eldorado Gold Corp, you can compare the effects of market volatilities on Constellium 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 Constellium with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellium and Eldorado Gold.
Diversification Opportunities for Constellium and Eldorado Gold
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Constellium and Eldorado is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Constellium Nv 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 Constellium 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 Constellium Nv 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 Constellium i.e., Constellium and Eldorado Gold go up and down completely randomly.
Pair Corralation between Constellium and Eldorado Gold
Given the investment horizon of 90 days Constellium Nv is expected to under-perform the Eldorado Gold. But the stock apears to be less risky and, when comparing its historical volatility, Constellium Nv is 1.4 times less risky than Eldorado Gold. The stock trades about -0.01 of its potential returns per unit of risk. The Eldorado Gold Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,555 in Eldorado Gold Corp on September 12, 2024 and sell it today you would earn a total of 110.00 from holding Eldorado Gold Corp or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Constellium Nv vs. Eldorado Gold Corp
Performance |
| Timeline |
| Constellium Nv |
| Eldorado Gold Corp |
Constellium and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellium and Eldorado Gold
The main advantage of trading using opposite Constellium and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellium 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.| Constellium vs. Century Aluminum | Constellium vs. Alcoa Corp | Constellium vs. China Hongqiao Group | Constellium vs. Norsk Hydro ASA |
| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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