Correlation Between Fortuna Silver and Eldorado Gold

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

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

Diversification Opportunities for Fortuna Silver and Eldorado Gold

-0.03

Correlation Coefficient

Fortuna Silver  Eldorado Gold

Good diversification

The 3 months correlation between Fortuna and Eldorado is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fortuna Silver Mines 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 Fortuna Silver 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 Fortuna Silver Mines 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 Fortuna Silver i.e., Fortuna Silver and Eldorado Gold go up and down completely randomly.

Pair Corralation between Fortuna Silver and Eldorado Gold

Considering the 90-day investment horizon Fortuna Silver Mines is expected to generate 1.17 times more return on investment than Eldorado Gold. However, Fortuna Silver is 1.17 times more volatile than Eldorado Gold Corp. It trades about 0.05 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.08 per unit of risk. If you would invest  483.00  in Fortuna Silver Mines on November 19, 2024 and sell it today you would earn a total of  32.00  from holding Fortuna Silver Mines or generate 6.63% return on investment over 90 days.

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

Fortuna Silver Mines  vs.  Eldorado Gold Corp

Fortuna Silver Mines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fortuna Silver may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Eldorado Gold Corp

Risk-Adjusted Performance

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 March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Fortuna Silver and Eldorado Gold

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

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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 Stocks Directory module to find actively traded stocks across global markets.