Correlation Between Eldorado Gold and JJill

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

Diversification Opportunities for Eldorado Gold and JJill

-0.56

Correlation Coefficient

Eldorado Gold  JJill

Excellent diversification

The 3 months correlation between Eldorado and JJill is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and JJill Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJill Inc 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 JJill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJill Inc has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and JJill go up and down completely randomly.

Pair Corralation between Eldorado Gold and JJill

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 0.83 times more return on investment than JJill. However, Eldorado Gold Corp is 1.2 times less risky than JJill. It trades about 0.06 of its potential returns per unit of risk. JJill Inc is currently generating about 0.03 per unit of risk. If you would invest  1,028  in Eldorado Gold Corp on September 19, 2024 and sell it today you would earn a total of  566.00  from holding Eldorado Gold Corp or generate 55.06% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  JJill Inc

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 very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

JJill Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JJill Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, JJill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eldorado Gold and JJill

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

The idea behind Eldorado Gold Corp and JJill Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.