Correlation Between Eldorado Gold and Pan American
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Pan American 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 Pan American 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 Pan American Silver, you can compare the effects of market volatilities on Eldorado Gold and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Pan American.
Diversification Opportunities for Eldorado Gold and Pan American
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eldorado and Pan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Pan American go up and down completely randomly.
Pair Corralation between Eldorado Gold and Pan American
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.87 times more return on investment than Pan American. However, Eldorado Gold Corp is 1.14 times less risky than Pan American. It trades about 0.07 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.04 per unit of risk. If you would invest 921.00 in Eldorado Gold Corp on August 27, 2024 and sell it today you would earn a total of 735.00 from holding Eldorado Gold Corp or generate 79.8% 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. Pan American Silver
Performance |
| Timeline |
| Eldorado Gold Corp |
| Pan American Silver |
Eldorado Gold and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Pan American
The main advantage of trading using opposite Eldorado Gold and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| Pan American vs. Newmont Goldcorp Corp | Pan American vs. Wheaton Precious Metals | Pan American vs. Franco Nevada | Pan American vs. Kinross Gold |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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