Correlation Between Merit Medical and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Merit Medical 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 Merit Medical and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Eldorado Gold Corp, you can compare the effects of market volatilities on Merit Medical 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 Merit Medical with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Eldorado Gold.
Diversification Opportunities for Merit Medical and Eldorado Gold
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merit and Eldorado is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems 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 Merit Medical 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 Merit Medical Systems 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 Merit Medical i.e., Merit Medical and Eldorado Gold go up and down completely randomly.
Pair Corralation between Merit Medical and Eldorado Gold
Given the investment horizon of 90 days Merit Medical is expected to generate 1.13 times less return on investment than Eldorado Gold. But when comparing it to its historical volatility, Merit Medical Systems is 1.51 times less risky than Eldorado Gold. It trades about 0.06 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 932.00 in Eldorado Gold Corp on November 19, 2024 and sell it today you would earn a total of 466.00 from holding Eldorado Gold Corp or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Eldorado Gold Corp
Performance |
| Timeline |
| Merit Medical Systems |
| Eldorado Gold Corp |
Merit Medical and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Eldorado Gold
The main advantage of trading using opposite Merit Medical and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical 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.| Merit Medical vs. Healthcare Triangle | Merit Medical vs. EUDA Health Holdings | Merit Medical vs. Mangoceuticals, Common Stock | Merit Medical vs. FOXO Technologies |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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