Correlation Between Eldorado Gold and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Eldorado Gold and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Arrow Electronics.
Diversification Opportunities for Eldorado Gold and Arrow Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eldorado and Arrow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Arrow Electronics go up and down completely randomly.
Pair Corralation between Eldorado Gold and Arrow Electronics
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 1.34 times more return on investment than Arrow Electronics. However, Eldorado Gold is 1.34 times more volatile than Arrow Electronics. It trades about -0.01 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.02 per unit of risk. If you would invest 1,611 in Eldorado Gold Corp on November 3, 2024 and sell it today you would lose (87.00) from holding Eldorado Gold Corp or give up 5.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Arrow Electronics
Performance |
| Timeline |
| Eldorado Gold Corp |
| Arrow Electronics |
Eldorado Gold and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Arrow Electronics
The main advantage of trading using opposite Eldorado Gold and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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