Correlation Between Eldorado Gold and GMS
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and GMS 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 GMS 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 GMS Inc, you can compare the effects of market volatilities on Eldorado Gold and GMS 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 GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and GMS.
Diversification Opportunities for Eldorado Gold and GMS
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eldorado and GMS is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and GMS go up and down completely randomly.
Pair Corralation between Eldorado Gold and GMS
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the GMS. In addition to that, Eldorado Gold is 1.49 times more volatile than GMS Inc. It trades about -0.09 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.2 per unit of volatility. If you would invest 9,076 in GMS Inc on August 28, 2024 and sell it today you would earn a total of 1,308 from holding GMS Inc or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. GMS Inc
Performance |
| Timeline |
| Eldorado Gold Corp |
| GMS Inc |
Eldorado Gold and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and GMS
The main advantage of trading using opposite Eldorado Gold and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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