Correlation Between Eldorado Gold and Iris Energy

Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Iris Energy 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 Iris Energy 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 Iris Energy, you can compare the effects of market volatilities on Eldorado Gold and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Iris Energy.

Diversification Opportunities for Eldorado Gold and Iris Energy

-0.22

Correlation Coefficient

Eldorado Gold  Iris Energy

Very good diversification

The 3 months correlation between Eldorado and Iris is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Iris Energy go up and down completely randomly.

Pair Corralation between Eldorado Gold and Iris Energy

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.45 times more return on investment than Iris Energy. However, Eldorado Gold Corp is 2.21 times less risky than Iris Energy. It trades about 0.09 of its potential returns per unit of risk. Iris Energy is currently generating about -0.09 per unit of risk. If you would invest  1,470  in Eldorado Gold Corp on December 28, 2024 and sell it today you would earn a total of  207.00  from holding Eldorado Gold Corp or generate 14.08% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Iris Energy

Eldorado Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Iris Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iris Energy 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eldorado Gold and Iris Energy

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

The idea behind Eldorado Gold Corp and Iris Energy 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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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.