Correlation Between Eldorado Gold and Carters

Can any of the company-specific risk be diversified away by investing in both Eldorado Gold and Carters 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 Carters 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 Carters, you can compare the effects of market volatilities on Eldorado Gold and Carters 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 Carters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eldorado Gold and Carters.

Diversification Opportunities for Eldorado Gold and Carters

0.75

Correlation Coefficient

Eldorado Gold  Carters

Poor diversification

The 3 months correlation between Eldorado and Carters is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Carters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carters 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 Carters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carters has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Carters go up and down completely randomly.

Pair Corralation between Eldorado Gold and Carters

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.96 times more return on investment than Carters. However, Eldorado Gold Corp is 1.04 times less risky than Carters. It trades about -0.08 of its potential returns per unit of risk. Carters is currently generating about -0.09 per unit of risk. 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

Eldorado Gold Corp  vs.  Carters

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.

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.

Pair Trading with Eldorado Gold and Carters

The main advantage of trading using opposite Eldorado Gold and Carters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eldorado Gold position performs unexpectedly, Carters 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 Carters will offset losses from the drop in Carters' long position.

The idea behind Eldorado Gold Corp and Carters 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.