Correlation Between Eldorado Gold and Magna International
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Magna International 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 Magna International 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 Magna International, you can compare the effects of market volatilities on Eldorado Gold and Magna International 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 Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Magna International.
Diversification Opportunities for Eldorado Gold and Magna International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eldorado and Magna is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International 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 Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Magna International go up and down completely randomly.
Pair Corralation between Eldorado Gold and Magna International
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Magna International. In addition to that, Eldorado Gold is 1.13 times more volatile than Magna International. It trades about -0.18 of its total potential returns per unit of risk. Magna International is currently generating about 0.18 per unit of volatility. If you would invest 4,087 in Magna International on August 31, 2024 and sell it today you would earn a total of 408.00 from holding Magna International or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Magna International
Performance |
| Timeline |
| Eldorado Gold Corp |
| Magna International |
Eldorado Gold and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Magna International
The main advantage of trading using opposite Eldorado Gold and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Magna International 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 Magna International will offset losses from the drop in Magna International's long position.| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Osisko Gold Ro |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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