Correlation Between Eldorado Gold and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and MGIC Investment 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 MGIC Investment 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 MGIC Investment Corp, you can compare the effects of market volatilities on Eldorado Gold and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and MGIC Investment.
Diversification Opportunities for Eldorado Gold and MGIC Investment
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eldorado and MGIC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment Corp 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and MGIC Investment go up and down completely randomly.
Pair Corralation between Eldorado Gold and MGIC Investment
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the MGIC Investment. In addition to that, Eldorado Gold is 1.87 times more volatile than MGIC Investment Corp. It trades about -0.03 of its total potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.4 per unit of volatility. If you would invest 2,344 in MGIC Investment Corp on September 2, 2024 and sell it today you would earn a total of 282.00 from holding MGIC Investment Corp or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. MGIC Investment Corp
Performance |
| Timeline |
| Eldorado Gold Corp |
| MGIC Investment Corp |
Eldorado Gold and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and MGIC Investment
The main advantage of trading using opposite Eldorado Gold and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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