Correlation Between Aluminum and Eldorado Gold

Can any of the company-specific risk be diversified away by investing in both Aluminum 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 Aluminum and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aluminum of and Eldorado Gold Corp, you can compare the effects of market volatilities on Aluminum 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 Aluminum with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum and Eldorado Gold.

Diversification Opportunities for Aluminum and Eldorado Gold

0.79

Correlation Coefficient

Aluminum  Eldorado Gold

Poor diversification

The 3 months correlation between Aluminum and Eldorado is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of 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 Aluminum 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 Aluminum of 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 Aluminum i.e., Aluminum and Eldorado Gold go up and down completely randomly.

Pair Corralation between Aluminum and Eldorado Gold

Assuming the 90 days horizon Aluminum of is expected to generate 2.15 times more return on investment than Eldorado Gold. However, Aluminum is 2.15 times more volatile than Eldorado Gold Corp. It trades about 0.01 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.0 per unit of risk. If you would invest  65.00  in Aluminum of on October 8, 2024 and sell it today you would lose (8.00) from holding Aluminum of or give up 12.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.4%
Values	Daily Returns

Aluminum of  vs.  Eldorado Gold Corp

Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aluminum and Eldorado Gold

The main advantage of trading using opposite Aluminum and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum 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 Aluminum of 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.