Correlation Between Eldorado Gold and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Eldorado Gold and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Caledonia Mining.
Diversification Opportunities for Eldorado Gold and Caledonia Mining
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eldorado and Caledonia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Caledonia Mining go up and down completely randomly.
Pair Corralation between Eldorado Gold and Caledonia Mining
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Caledonia Mining. In addition to that, Eldorado Gold is 1.73 times more volatile than Caledonia Mining. It trades about -0.12 of its total potential returns per unit of risk. Caledonia Mining is currently generating about 0.31 per unit of volatility. If you would invest 915.00 in Caledonia Mining on November 8, 2024 and sell it today you would earn a total of 118.00 from holding Caledonia Mining or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Caledonia Mining
Performance |
| Timeline |
| Eldorado Gold Corp |
| Caledonia Mining |
Eldorado Gold and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Caledonia Mining
The main advantage of trading using opposite Eldorado Gold and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| Caledonia Mining vs. DRDGOLD Limited ADR | Caledonia Mining vs. Galiano Gold | Caledonia Mining vs. Mastech Holdings | Caledonia Mining vs. EMX Royalty 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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