Correlation Between Eldorado Gold and Barnes
Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Barnes 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 Barnes 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 Barnes Group, you can compare the effects of market volatilities on Eldorado Gold and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Barnes.
Diversification Opportunities for Eldorado Gold and Barnes
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eldorado and Barnes is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Barnes go up and down completely randomly.
Pair Corralation between Eldorado Gold and Barnes
Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.8 times more return on investment than Barnes. However, Eldorado Gold Corp is 1.24 times less risky than Barnes. It trades about 0.14 of its potential returns per unit of risk. Barnes Group is currently generating about -0.03 per unit of risk. If you would invest 1,349 in Eldorado Gold Corp on January 24, 2024 and sell it today you would earn a total of 82.00 from holding Eldorado Gold Corp or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Eldorado Gold Corp vs. Barnes Group
Performance |
| Timeline |
| Eldorado Gold Corp |
| Barnes Group |
Eldorado Gold and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eldorado Gold and Barnes
The main advantage of trading using opposite Eldorado Gold and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.The idea behind Eldorado Gold Corp and Barnes Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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