Correlation Between Software Acquisition and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Software Acquisition 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 Software Acquisition and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Acquisition Group and Eldorado Gold Corp, you can compare the effects of market volatilities on Software Acquisition 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 Software Acquisition with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Acquisition and Eldorado Gold.
Diversification Opportunities for Software Acquisition and Eldorado Gold
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Software and Eldorado is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Software Acquisition Group 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 Software Acquisition 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 Software Acquisition Group 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 Software Acquisition i.e., Software Acquisition and Eldorado Gold go up and down completely randomly.
Pair Corralation between Software Acquisition and Eldorado Gold
Given the investment horizon of 90 days Software Acquisition Group is expected to generate 0.69 times more return on investment than Eldorado Gold. However, Software Acquisition Group is 1.44 times less risky than Eldorado Gold. It trades about 0.03 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.11 per unit of risk. If you would invest 111.00 in Software Acquisition Group on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Software Acquisition Group or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Software Acquisition Group vs. Eldorado Gold Corp
Performance |
| Timeline |
| Software Acquisition |
| Eldorado Gold Corp |
Software Acquisition and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Acquisition and Eldorado Gold
The main advantage of trading using opposite Software Acquisition and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Acquisition 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.| Software Acquisition vs. Getty Images Holdings | Software Acquisition vs. Zhihu Inc ADR | Software Acquisition vs. Catalyst Pharmaceuticals | Software Acquisition vs. Inhibrx |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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