Correlation Between Eldorado Gold and AMEREN

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Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and AMEREN 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 AMEREN 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 AMEREN ILL 37, you can compare the effects of market volatilities on Eldorado Gold and AMEREN 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 AMEREN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and AMEREN.

Diversification Opportunities for Eldorado Gold and AMEREN

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Eldorado and AMEREN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and AMEREN ILL 37 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMEREN ILL 37 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 AMEREN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMEREN ILL 37 has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and AMEREN go up and down completely randomly.

Pair Corralation between Eldorado Gold and AMEREN

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the AMEREN. In addition to that, Eldorado Gold is 2.01 times more volatile than AMEREN ILL 37. It trades about -0.03 of its total potential returns per unit of risk. AMEREN ILL 37 is currently generating about 0.17 per unit of volatility. If you would invest  7,666  in AMEREN ILL 37 on September 2, 2024 and sell it today you would earn a total of  280.00  from holding AMEREN ILL 37 or generate 3.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy80.95%
ValuesDaily Returns

Eldorado Gold Corp  vs.  AMEREN ILL 37

 Performance 
       Timeline  
Eldorado Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
AMEREN ILL 37 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AMEREN ILL 37 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AMEREN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eldorado Gold and AMEREN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eldorado Gold and AMEREN

The main advantage of trading using opposite Eldorado Gold and AMEREN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, AMEREN 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 AMEREN will offset losses from the drop in AMEREN's long position.
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The idea behind Eldorado Gold Corp and AMEREN ILL 37 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.
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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