Correlation Between Eldorado Gold and American Lithium
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and American Lithium 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 Eldorado Gold and American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eldorado Gold Corp and American Lithium Corp, you can compare the effects of market volatilities on Eldorado Gold and American Lithium 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 Eldorado Gold with a short position of American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and American Lithium.
Diversification Opportunities for Eldorado Gold and American Lithium
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eldorado and American is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and American Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Corp and Eldorado 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 Eldorado Gold Corp are associated (or correlated) with American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Corp has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and American Lithium go up and down completely randomly.
Pair Corralation between Eldorado Gold and American Lithium
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.31 times more return on investment than American Lithium. However, Eldorado Gold Corp is 3.24 times less risky than American Lithium. It trades about 0.16 of its potential returns per unit of risk. American Lithium Corp is currently generating about -0.27 per unit of risk. If you would invest 1,537 in Eldorado Gold Corp on September 13, 2024 and sell it today you would earn a total of 130.50 from holding Eldorado Gold Corp or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eldorado Gold Corp vs. American Lithium Corp
Performance |
| Timeline |
| Eldorado Gold Corp |
| American Lithium Corp |
Eldorado Gold and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and American Lithium
The main advantage of trading using opposite Eldorado Gold and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| American Lithium vs. Stepan Company | American Lithium vs. East Africa Metals | American Lithium vs. Eastman Chemical | American Lithium vs. Eldorado Gold Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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