Correlation Between Lithium Americas and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Lithium Americas 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 Lithium Americas and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Americas Corp and Eldorado Gold Corp, you can compare the effects of market volatilities on Lithium Americas 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 Lithium Americas with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Americas and Eldorado Gold.
Diversification Opportunities for Lithium Americas and Eldorado Gold
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lithium and Eldorado is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Americas Corp 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 Lithium Americas 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 Lithium Americas Corp 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 Lithium Americas i.e., Lithium Americas and Eldorado Gold go up and down completely randomly.
Pair Corralation between Lithium Americas and Eldorado Gold
Considering the 90-day investment horizon Lithium Americas is expected to generate 13.48 times less return on investment than Eldorado Gold. In addition to that, Lithium Americas is 2.12 times more volatile than Eldorado Gold Corp. It trades about 0.0 of its total potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.05 per unit of volatility. If you would invest 1,233 in Eldorado Gold Corp on November 3, 2024 and sell it today you would earn a total of 291.00 from holding Eldorado Gold Corp or generate 23.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Americas Corp vs. Eldorado Gold Corp
Performance |
| Timeline |
| Lithium Americas Corp |
| Eldorado Gold Corp |
Lithium Americas and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Americas and Eldorado Gold
The main advantage of trading using opposite Lithium Americas and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Americas 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.| Lithium Americas vs. Sigma Lithium Resources | Lithium Americas vs. Standard Lithium | Lithium Americas vs. Sayona Mining Limited | Lithium Americas vs. MP Materials Corp |
| Eldorado Gold vs. IAMGold | Eldorado Gold vs. Kinross Gold | Eldorado Gold vs. Agnico Eagle Mines | Eldorado Gold vs. Gold Fields Ltd |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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