Correlation Between Eldorado Gold and Vestis

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

Diversification Opportunities for Eldorado Gold and Vestis

0.2

Correlation Coefficient

Eldorado Gold  Vestis

Modest diversification

The 3 months correlation between Eldorado and Vestis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Vestis go up and down completely randomly.

Pair Corralation between Eldorado Gold and Vestis

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Vestis. But the stock apears to be less risky and, when comparing its historical volatility, Eldorado Gold Corp is 1.61 times less risky than Vestis. The stock trades about -0.04 of its potential returns per unit of risk. The Vestis is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,325  in Vestis on September 3, 2024 and sell it today you would earn a total of  283.00  from holding Vestis or generate 21.36% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Vestis

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.

Vestis

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vestis are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Vestis unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eldorado Gold and Vestis

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

The idea behind Eldorado Gold Corp and Vestis 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.