Correlation Between Eldorado Gold and Sibanye Gold
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Sibanye Gold 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 Sibanye Gold 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 Sibanye Gold Ltd, you can compare the effects of market volatilities on Eldorado Gold and Sibanye Gold 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 Sibanye Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Sibanye Gold.
Diversification Opportunities for Eldorado Gold and Sibanye Gold
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eldorado and Sibanye is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Sibanye Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sibanye Gold 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 Sibanye Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sibanye Gold has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Sibanye Gold go up and down completely randomly.
Pair Corralation between Eldorado Gold and Sibanye Gold
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.62 times more return on investment than Sibanye Gold. However, Eldorado Gold Corp is 1.62 times less risky than Sibanye Gold. It trades about 0.06 of its potential returns per unit of risk. Sibanye Gold Ltd is currently generating about -0.01 per unit of risk. If you would invest 1,009 in Eldorado Gold Corp on August 28, 2024 and sell it today you would earn a total of 560.00 from holding Eldorado Gold Corp or generate 55.5% 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. Sibanye Gold Ltd
Performance |
| Timeline |
| Eldorado Gold Corp |
| Sibanye Gold |
Eldorado Gold and Sibanye Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Sibanye Gold
The main advantage of trading using opposite Eldorado Gold and Sibanye Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Sibanye Gold 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 Sibanye Gold will offset losses from the drop in Sibanye Gold's long position.The idea behind Eldorado Gold Corp and Sibanye Gold Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sibanye Gold vs. AngloGold Ashanti plc | Sibanye Gold vs. Harmony Gold Mining | Sibanye Gold vs. Eldorado Gold Corp | Sibanye Gold 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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