Correlation Between Eldorado Gold and SIMON

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

Diversification Opportunities for Eldorado Gold and SIMON

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Eldorado and SIMON is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and SIMON PPTY GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMON PPTY GROUP 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 SIMON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMON PPTY GROUP has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and SIMON go up and down completely randomly.

Pair Corralation between Eldorado Gold and SIMON

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the SIMON. In addition to that, Eldorado Gold is 41.9 times more volatile than SIMON PPTY GROUP. It trades about -0.07 of its total potential returns per unit of risk. SIMON PPTY GROUP is currently generating about 0.09 per unit of volatility. If you would invest  9,732  in SIMON PPTY GROUP on November 27, 2024 and sell it today you would earn a total of  17.00  from holding SIMON PPTY GROUP or generate 0.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Eldorado Gold Corp  vs.  SIMON PPTY GROUP

 Performance 
       Timeline  
Eldorado Gold Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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 latest fragile performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
SIMON PPTY GROUP 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SIMON PPTY GROUP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eldorado Gold and SIMON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eldorado Gold and SIMON

The main advantage of trading using opposite Eldorado Gold and SIMON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, SIMON 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 SIMON will offset losses from the drop in SIMON's long position.
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The idea behind Eldorado Gold Corp and SIMON PPTY GROUP 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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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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