Correlation Between Gold Royalty and Eldorado Gold

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

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

Diversification Opportunities for Gold Royalty and Eldorado Gold

-0.09

Correlation Coefficient

Gold Royalty  Eldorado Gold

Good diversification

The 3 months correlation between Gold and Eldorado is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp 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 Gold Royalty 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 Gold Royalty Corp 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 Gold Royalty i.e., Gold Royalty and Eldorado Gold go up and down completely randomly.

Pair Corralation between Gold Royalty and Eldorado Gold

Given the investment horizon of 90 days Gold Royalty Corp is expected to generate 1.06 times more return on investment than Eldorado Gold. However, Gold Royalty is 1.06 times more volatile than Eldorado Gold Corp. It trades about 0.14 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  118.00  in Gold Royalty Corp on December 28, 2024 and sell it today you would earn a total of  31.00  from holding Gold Royalty Corp or generate 26.27% return on investment over 90 days.

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

Gold Royalty Corp  vs.  Eldorado Gold Corp

Gold Royalty Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Gold Royalty showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Gold Royalty and Eldorado Gold

The main advantage of trading using opposite Gold Royalty and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Royalty 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 Gold Royalty Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..