Correlation Between TOYOTA and Eldorado Gold

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Can any of the company-specific risk be diversified away by investing in both TOYOTA 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 TOYOTA and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOYOTA 48 10 JAN 25 and Eldorado Gold Corp, you can compare the effects of market volatilities on TOYOTA 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 TOYOTA with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOYOTA and Eldorado Gold.

Diversification Opportunities for TOYOTA and Eldorado Gold

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between TOYOTA and Eldorado is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding TOYOTA 48 10 JAN 25 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 TOYOTA 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 TOYOTA 48 10 JAN 25 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 TOYOTA i.e., TOYOTA and Eldorado Gold go up and down completely randomly.

Pair Corralation between TOYOTA and Eldorado Gold

Assuming the 90 days trading horizon TOYOTA 48 10 JAN 25 is expected to generate 0.05 times more return on investment than Eldorado Gold. However, TOYOTA 48 10 JAN 25 is 21.67 times less risky than Eldorado Gold. It trades about -0.16 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  10,001  in TOYOTA 48 10 JAN 25 on August 30, 2024 and sell it today you would lose (44.00) from holding TOYOTA 48 10 JAN 25 or give up 0.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy91.3%
ValuesDaily Returns

TOYOTA 48 10 JAN 25  vs.  Eldorado Gold Corp

 Performance 
       Timeline  
TOYOTA 48 10 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days TOYOTA 48 10 JAN 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TOYOTA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Eldorado Gold Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

TOYOTA and Eldorado Gold Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TOYOTA and Eldorado Gold

The main advantage of trading using opposite TOYOTA and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOYOTA 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.
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The idea behind TOYOTA 48 10 JAN 25 and Eldorado Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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