Correlation Between Weyco and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Weyco 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 Weyco and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Eldorado Gold Corp, you can compare the effects of market volatilities on Weyco 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 Weyco with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Eldorado Gold.
Diversification Opportunities for Weyco and Eldorado Gold
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weyco and Eldorado is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Weyco 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 Weyco 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 Weyco 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 Weyco i.e., Weyco and Eldorado Gold go up and down completely randomly.
Pair Corralation between Weyco and Eldorado Gold
Given the investment horizon of 90 days Weyco is expected to generate 1.55 times less return on investment than Eldorado Gold. But when comparing it to its historical volatility, Weyco Group is 1.1 times less risky than Eldorado Gold. It trades about 0.05 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 814.00 in Eldorado Gold Corp on August 28, 2024 and sell it today you would earn a total of 755.00 from holding Eldorado Gold Corp or generate 92.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Eldorado Gold Corp
Performance |
| Timeline |
| Weyco Group |
| Eldorado Gold Corp |
Weyco and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Eldorado Gold
The main advantage of trading using opposite Weyco and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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.The idea behind Weyco Group 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.| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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