Correlation Between Carters and Eldorado Gold

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

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

Diversification Opportunities for Carters and Eldorado Gold

0.75

Correlation Coefficient

Carters  Eldorado Gold

Poor diversification

The 3 months correlation between Carters and Eldorado is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Carters 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 Carters 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 Carters 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 Carters i.e., Carters and Eldorado Gold go up and down completely randomly.

Pair Corralation between Carters and Eldorado Gold

Considering the 90-day investment horizon Carters is expected to under-perform the Eldorado Gold. In addition to that, Carters is 1.04 times more volatile than Eldorado Gold Corp. It trades about -0.09 of its total potential returns per unit of risk. Eldorado Gold Corp is currently generating about -0.08 per unit of volatility. If you would invest  1,737  in Eldorado Gold Corp on September 28, 2024 and sell it today you would lose (239.00) from holding Eldorado Gold Corp or give up 13.76% of portfolio value over 90 days.

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

Carters  vs.  Eldorado Gold Corp

Carters

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carters has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Carters and Eldorado Gold

The main advantage of trading using opposite Carters and Eldorado Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carters 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 Carters 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.