Correlation Between Eldorado Gold and Stepan
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Stepan 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 Stepan 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 Stepan Company, you can compare the effects of market volatilities on Eldorado Gold and Stepan 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 Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Stepan.
Diversification Opportunities for Eldorado Gold and Stepan
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eldorado and Stepan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company 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 Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Stepan go up and down completely randomly.
Pair Corralation between Eldorado Gold and Stepan
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Stepan. In addition to that, Eldorado Gold is 1.27 times more volatile than Stepan Company. It trades about -0.12 of its total potential returns per unit of risk. Stepan Company is currently generating about 0.11 per unit of volatility. If you would invest 7,387 in Stepan Company on August 27, 2024 and sell it today you would earn a total of 393.00 from holding Stepan Company or generate 5.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Stepan Company
Performance |
| Timeline |
| Eldorado Gold Corp |
| Stepan Company |
Eldorado Gold and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Stepan
The main advantage of trading using opposite Eldorado Gold and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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