Correlation Between Orezone Gold and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Orezone Gold 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 Orezone Gold and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orezone Gold Corp and Eldorado Gold Corp, you can compare the effects of market volatilities on Orezone Gold 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 Orezone Gold with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orezone Gold and Eldorado Gold.
Diversification Opportunities for Orezone Gold and Eldorado Gold
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Orezone and Eldorado is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Orezone Gold 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 Orezone Gold 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 Orezone Gold 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 Orezone Gold i.e., Orezone Gold and Eldorado Gold go up and down completely randomly.
Pair Corralation between Orezone Gold and Eldorado Gold
Assuming the 90 days trading horizon Orezone Gold Corp is expected to under-perform the Eldorado Gold. In addition to that, Orezone Gold is 1.48 times more volatile than Eldorado Gold Corp. It trades about -0.03 of its total potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.07 per unit of volatility. If you would invest 1,235 in Eldorado Gold Corp on August 27, 2024 and sell it today you would earn a total of 1,083 from holding Eldorado Gold Corp or generate 87.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orezone Gold Corp vs. Eldorado Gold Corp
Performance |
| Timeline |
| Orezone Gold Corp |
| Eldorado Gold Corp |
Orezone Gold and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orezone Gold and Eldorado Gold
The main advantage of trading using opposite Orezone Gold and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orezone Gold 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.| Orezone Gold vs. i 80 Gold Corp | Orezone Gold vs. Perseus Mining | Orezone Gold vs. K92 Mining | Orezone Gold vs. GoGold Resources |
| Eldorado Gold vs. First Majestic Silver | Eldorado Gold vs. Ivanhoe Energy | Eldorado Gold vs. Orezone Gold Corp |
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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