Correlation Between Dow Jones and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Eldorado Gold Corp, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Eldorado Gold.
Diversification Opportunities for Dow Jones and Eldorado Gold
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Eldorado is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Eldorado Gold go up and down completely randomly.
Pair Corralation between Dow Jones and Eldorado Gold
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.3 times more return on investment than Eldorado Gold. However, Dow Jones Industrial is 3.32 times less risky than Eldorado Gold. It trades about 0.19 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.01 per unit of risk. If you would invest 4,093,693 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 378,513 from holding Dow Jones Industrial or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Eldorado Gold Corp
Performance |
| Timeline |
Dow Jones and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Eldorado Gold Corp
Pair trading matchups for Eldorado Gold
Pair Trading with Dow Jones and Eldorado Gold
The main advantage of trading using opposite Dow Jones and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Agnico Eagle Mines |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Correlations Find global opportunities by holding instruments from different markets |