Correlation Between Eldorado Gold and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Coca Cola 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 Coca Cola 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 The Coca Cola, you can compare the effects of market volatilities on Eldorado Gold and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Coca Cola.
Diversification Opportunities for Eldorado Gold and Coca Cola
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eldorado and Coca is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and The Coca Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Coca Cola go up and down completely randomly.
Pair Corralation between Eldorado Gold and Coca Cola
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Coca Cola. In addition to that, Eldorado Gold is 3.38 times more volatile than The Coca Cola. It trades about -0.18 of its total potential returns per unit of risk. The Coca Cola is currently generating about -0.12 per unit of volatility. If you would invest 6,592 in The Coca Cola on August 31, 2024 and sell it today you would lose (149.00) from holding The Coca Cola or give up 2.26% 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. The Coca Cola
Performance |
| Timeline |
| Eldorado Gold Corp |
| Coca Cola |
Eldorado Gold and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Coca Cola
The main advantage of trading using opposite Eldorado Gold and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Osisko Gold Ro |
| Coca Cola vs. Monster Beverage Corp | Coca Cola vs. RLJ Lodging Trust | Coca Cola vs. Aquagold International | Coca Cola vs. Stepstone Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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