Correlation Between Eldorado Gold and Western Digital
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Western Digital 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 Western Digital 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 Western Digital, you can compare the effects of market volatilities on Eldorado Gold and Western Digital 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 Western Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Western Digital.
Diversification Opportunities for Eldorado Gold and Western Digital
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eldorado and Western is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital 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 Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Western Digital go up and down completely randomly.
Pair Corralation between Eldorado Gold and Western Digital
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Western Digital. In addition to that, Eldorado Gold is 1.06 times more volatile than Western Digital. It trades about -0.01 of its total potential returns per unit of risk. Western Digital is currently generating about 0.06 per unit of volatility. If you would invest 5,699 in Western Digital on November 3, 2024 and sell it today you would earn a total of 814.00 from holding Western Digital or generate 14.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Western Digital
Performance |
| Timeline |
| Eldorado Gold Corp |
| Western Digital |
Eldorado Gold and Western Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Western Digital
The main advantage of trading using opposite Eldorado Gold and Western Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Western Digital 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 Western Digital will offset losses from the drop in Western Digital's long position.| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
| Western Digital vs. NetApp Inc | Western Digital vs. Logitech International SA | Western Digital vs. HP Inc | Western Digital vs. Dell Technologies |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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