Correlation Between Eldorado Gold and Bel Fuse
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Bel Fuse 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 Bel Fuse 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 Bel Fuse A, you can compare the effects of market volatilities on Eldorado Gold and Bel Fuse 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 Bel Fuse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Bel Fuse.
Diversification Opportunities for Eldorado Gold and Bel Fuse
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eldorado and Bel is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Bel Fuse A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse A 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse A has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Bel Fuse go up and down completely randomly.
Pair Corralation between Eldorado Gold and Bel Fuse
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Bel Fuse. In addition to that, Eldorado Gold is 1.48 times more volatile than Bel Fuse A. It trades about -0.11 of its total potential returns per unit of risk. Bel Fuse A is currently generating about -0.13 per unit of volatility. If you would invest 10,228 in Bel Fuse A on August 28, 2024 and sell it today you would lose (625.00) from holding Bel Fuse A or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Bel Fuse A
Performance |
| Timeline |
| Eldorado Gold Corp |
| Bel Fuse A |
Eldorado Gold and Bel Fuse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Bel Fuse
The main advantage of trading using opposite Eldorado Gold and Bel Fuse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Bel Fuse 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 Bel Fuse will offset losses from the drop in Bel Fuse's long position.The idea behind Eldorado Gold Corp and Bel Fuse A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bel Fuse vs. Richardson Electronics | Bel Fuse vs. LSI Industries | Bel Fuse vs. Benchmark Electronics | Bel Fuse vs. Plexus 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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