Correlation Between Magna International and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Eldorado Gold Corp, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Eldorado Gold.
Diversification Opportunities for Magna International and Eldorado Gold
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Eldorado is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Magna International 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 Magna International 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 Magna International 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 Magna International i.e., Magna International and Eldorado Gold go up and down completely randomly.
Pair Corralation between Magna International and Eldorado Gold
Considering the 90-day investment horizon Magna International is expected to generate 0.88 times more return on investment than Eldorado Gold. However, Magna International is 1.13 times less risky than Eldorado Gold. It trades about 0.18 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.18 per unit of risk. If you would invest 4,087 in Magna International on August 31, 2024 and sell it today you would earn a total of 408.00 from holding Magna International or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Eldorado Gold Corp
Performance |
| Timeline |
| Magna International |
| Eldorado Gold Corp |
Magna International and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Eldorado Gold
The main advantage of trading using opposite Magna International and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| Eldorado Gold vs. Franco Nevada | Eldorado Gold vs. Alamos Gold | Eldorado Gold vs. Seabridge Gold | Eldorado Gold vs. Osisko Gold Ro |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |