Correlation Between Global Ship and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Global Ship and Eldorado Gold 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 Global Ship and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Eldorado Gold Corp, you can compare the effects of market volatilities on Global Ship and Eldorado Gold 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 Global Ship with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Eldorado Gold.
Diversification Opportunities for Global Ship and Eldorado Gold
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Eldorado is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and Global Ship 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 Global Ship Lease are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of Global Ship i.e., Global Ship and Eldorado Gold go up and down completely randomly.
Pair Corralation between Global Ship and Eldorado Gold
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.25 times more return on investment than Eldorado Gold. However, Global Ship Lease is 3.94 times less risky than Eldorado Gold. It trades about 0.05 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.06 per unit of risk. If you would invest 2,617 in Global Ship Lease on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Global Ship Lease or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Eldorado Gold Corp
Performance |
| Timeline |
| Global Ship Lease |
| Eldorado Gold Corp |
Global Ship and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Eldorado Gold
The main advantage of trading using opposite Global Ship and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Eldorado Gold 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 Eldorado Gold will offset losses from the drop in Eldorado Gold's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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