Correlation Between Marfrig Global and Eldorado Gold

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

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

Diversification Opportunities for Marfrig Global and Eldorado Gold

0.24

Correlation Coefficient

Marfrig Global  Eldorado Gold

Modest diversification

The 3 months correlation between Marfrig and Eldorado is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Marfrig Global Foods 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 Marfrig Global 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 Marfrig Global Foods 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 Marfrig Global i.e., Marfrig Global and Eldorado Gold go up and down completely randomly.

Pair Corralation between Marfrig Global and Eldorado Gold

Assuming the 90 days horizon Marfrig Global Foods is expected to generate 1.32 times more return on investment than Eldorado Gold. However, Marfrig Global is 1.32 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 0.05 per unit of risk. If you would invest  150.00  in Marfrig Global Foods on October 25, 2024 and sell it today you would earn a total of  122.00  from holding Marfrig Global Foods or generate 81.33% return on investment over 90 days.

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

Marfrig Global Foods  vs.  Eldorado Gold Corp

Marfrig Global Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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

Pair Trading with Marfrig Global and Eldorado Gold

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

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .