Correlation Between Eldorado Gold and Centerra Gold
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Centerra 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 Eldorado Gold and Centerra Gold 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 Centerra Gold, you can compare the effects of market volatilities on Eldorado Gold and Centerra 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 Eldorado Gold with a short position of Centerra Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Centerra Gold.
Diversification Opportunities for Eldorado Gold and Centerra Gold
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eldorado and Centerra is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold 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 Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Centerra Gold go up and down completely randomly.
Pair Corralation between Eldorado Gold and Centerra Gold
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.9 times more return on investment than Centerra Gold. However, Eldorado Gold Corp is 1.12 times less risky than Centerra Gold. It trades about 0.05 of its potential returns per unit of risk. Centerra Gold is currently generating about 0.02 per unit of risk. If you would invest 958.00 in Eldorado Gold Corp on November 1, 2024 and sell it today you would earn a total of 584.00 from holding Eldorado Gold Corp or generate 60.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Centerra Gold
Performance |
| Timeline |
| Eldorado Gold Corp |
| Centerra Gold |
Eldorado Gold and Centerra Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Centerra Gold
The main advantage of trading using opposite Eldorado Gold and Centerra Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Centerra 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 Centerra Gold will offset losses from the drop in Centerra Gold's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| Centerra Gold vs. Gold Fields Ltd | Centerra Gold vs. Eldorado Gold Corp | Centerra Gold vs. Osisko Gold Ro | Centerra Gold vs. SSR Mining |
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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