Correlation Between Sealed Air and Eldorado Gold

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

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

Diversification Opportunities for Sealed Air and Eldorado Gold

0.29

Correlation Coefficient

Sealed Air  Eldorado Gold

Modest diversification

The 3 months correlation between Sealed and Eldorado is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air 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 Sealed Air 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 Sealed Air 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 Sealed Air i.e., Sealed Air and Eldorado Gold go up and down completely randomly.

Pair Corralation between Sealed Air and Eldorado Gold

Considering the 90-day investment horizon Sealed Air is expected to generate 0.59 times more return on investment than Eldorado Gold. However, Sealed Air is 1.69 times less risky than Eldorado Gold. It trades about -0.17 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.11 per unit of risk. If you would invest  3,604  in Sealed Air on September 28, 2024 and sell it today you would lose (178.00) from holding Sealed Air or give up 4.94% of portfolio value over 90 days.

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

Sealed Air  vs.  Eldorado Gold Corp

Sealed Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sealed Air has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sealed Air is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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

Pair Trading with Sealed Air and Eldorado Gold

The main advantage of trading using opposite Sealed Air and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air 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 Sealed Air 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.