Correlation Between Wheaton Precious and Eldorado Gold
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Eldorado Gold Corp, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Eldorado Gold.
Diversification Opportunities for Wheaton Precious and Eldorado Gold
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wheaton and Eldorado is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Eldorado Gold go up and down completely randomly.
Pair Corralation between Wheaton Precious and Eldorado Gold
Considering the 90-day investment horizon Wheaton Precious is expected to generate 1.49 times less return on investment than Eldorado Gold. But when comparing it to its historical volatility, Wheaton Precious Metals is 1.3 times less risky than Eldorado Gold. It trades about 0.06 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 921.00 in Eldorado Gold Corp on August 27, 2024 and sell it today you would earn a total of 735.00 from holding Eldorado Gold Corp or generate 79.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Eldorado Gold Corp
Performance |
| Timeline |
| Wheaton Precious Metals |
| Eldorado Gold Corp |
Wheaton Precious and Eldorado Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Eldorado Gold
The main advantage of trading using opposite Wheaton Precious and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Royal Gold | Wheaton Precious vs. Agnico Eagle Mines | Wheaton Precious vs. Sandstorm Gold Ltd | Wheaton Precious vs. Osisko Gold Ro |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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