Correlation Between Eldorado Gold and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Olympic Steel 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 Olympic Steel 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 Olympic Steel, you can compare the effects of market volatilities on Eldorado Gold and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Olympic Steel.
Diversification Opportunities for Eldorado Gold and Olympic Steel
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eldorado and Olympic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Olympic Steel go up and down completely randomly.
Pair Corralation between Eldorado Gold and Olympic Steel
Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the Olympic Steel. But the stock apears to be less risky and, when comparing its historical volatility, Eldorado Gold Corp is 1.11 times less risky than Olympic Steel. The stock trades about -0.05 of its potential returns per unit of risk. The Olympic Steel is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,833 in Olympic Steel on September 15, 2024 and sell it today you would earn a total of 134.00 from holding Olympic Steel or generate 3.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Eldorado Gold Corp vs. Olympic Steel
Performance |
Timeline |
Eldorado Gold Corp |
Olympic Steel |
Eldorado Gold and Olympic Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eldorado Gold and Olympic Steel
The main advantage of trading using opposite Eldorado Gold and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.Eldorado Gold vs. Fortitude Gold Corp | Eldorado Gold vs. New Gold | Eldorado Gold vs. Galiano Gold | Eldorado Gold vs. GoldMining |
Olympic Steel vs. Fortitude Gold Corp | Olympic Steel vs. New Gold | Olympic Steel vs. Galiano Gold | Olympic Steel vs. GoldMining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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