Correlation Between Eldorado Gold and Volaris
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Volaris 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 Volaris 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 Volaris, you can compare the effects of market volatilities on Eldorado Gold and Volaris 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 Volaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Volaris.
Diversification Opportunities for Eldorado Gold and Volaris
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eldorado and Volaris is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Volaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volaris 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 Volaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volaris has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Volaris go up and down completely randomly.
Pair Corralation between Eldorado Gold and Volaris
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Volaris. In addition to that, Eldorado Gold is 1.35 times more volatile than Volaris. It trades about -0.18 of its total potential returns per unit of risk. Volaris is currently generating about 0.08 per unit of volatility. If you would invest 741.00 in Volaris on August 31, 2024 and sell it today you would earn a total of 26.00 from holding Volaris or generate 3.51% 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. Volaris
Performance |
| Timeline |
| Eldorado Gold Corp |
| Volaris |
Eldorado Gold and Volaris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Volaris
The main advantage of trading using opposite Eldorado Gold and Volaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Volaris 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 Volaris will offset losses from the drop in Volaris' long position.| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Osisko Gold Ro |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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