Correlation Between Eldorado Gold and Denison Mines

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

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

Diversification Opportunities for Eldorado Gold and Denison Mines

0.53

Correlation Coefficient

Eldorado Gold  Denison Mines

Very weak diversification

The 3 months correlation between Eldorado and Denison is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp and Eldorado Gold 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 Eldorado Gold Corp are associated (or correlated) with Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Denison Mines go up and down completely randomly.

Pair Corralation between Eldorado Gold and Denison Mines

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Denison Mines. But the stock apears to be less risky and, when comparing its historical volatility, Eldorado Gold Corp is 1.31 times less risky than Denison Mines. The stock trades about -0.14 of its potential returns per unit of risk. The Denison Mines Corp is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  229.00  in Denison Mines Corp on October 22, 2024 and sell it today you would lose (41.00) from holding Denison Mines Corp or give up 17.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eldorado Gold Corp  vs.  Denison Mines Corp

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Denison Mines Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Denison Mines Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eldorado Gold and Denison Mines

The main advantage of trading using opposite Eldorado Gold and Denison Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Denison Mines 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 Denison Mines will offset losses from the drop in Denison Mines' long position.

The idea behind Eldorado Gold Corp and Denison Mines 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.