Correlation Between Northern Star and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Northern Star 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 Northern Star and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Star Resources and Eldorado Gold Corp, you can compare the effects of market volatilities on Northern Star 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 Northern Star with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Star and Eldorado Gold.
Diversification Opportunities for Northern Star and Eldorado Gold
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Northern and Eldorado is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Northern Star Resources 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 Northern Star 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 Northern Star Resources 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 Northern Star i.e., Northern Star and Eldorado Gold go up and down completely randomly.
Pair Corralation between Northern Star and Eldorado Gold
Assuming the 90 days horizon Northern Star Resources is expected to generate 1.28 times more return on investment than Eldorado Gold. However, Northern Star is 1.28 times more volatile than Eldorado Gold Corp. It trades about 0.07 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.05 per unit of risk. If you would invest 788.00 in Northern Star Resources on August 31, 2024 and sell it today you would earn a total of 352.00 from holding Northern Star Resources or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.38% |
| Values | Daily Returns |
Northern Star Resources vs. Eldorado Gold Corp
Performance |
| Timeline |
| Northern Star Resources |
| Eldorado Gold Corp |
Northern Star and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Star and Eldorado Gold
The main advantage of trading using opposite Northern Star and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Star 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.| Northern Star vs. Regis Resources | Northern Star vs. West African Resources | Northern Star vs. Dundee Precious Metals | Northern Star vs. Maple Gold Mines |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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