Correlation Between Eldorado Gold and KeyCorp

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

Diversification Opportunities for Eldorado Gold and KeyCorp

0.42

Correlation Coefficient

Eldorado Gold  KeyCorp

Very weak diversification

The 3 months correlation between Eldorado and KeyCorp is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and KeyCorp go up and down completely randomly.

Pair Corralation between Eldorado Gold and KeyCorp

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 3.09 times more return on investment than KeyCorp. However, Eldorado Gold is 3.09 times more volatile than KeyCorp. It trades about -0.01 of its potential returns per unit of risk. KeyCorp is currently generating about -0.06 per unit of risk. If you would invest  1,776  in Eldorado Gold Corp on September 14, 2024 and sell it today you would lose (52.00) from holding Eldorado Gold Corp or give up 2.93% of portfolio value over 90 days.

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

Eldorado Gold Corp  vs.  KeyCorp

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.

KeyCorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, KeyCorp is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Eldorado Gold and KeyCorp

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

The idea behind Eldorado Gold Corp and KeyCorp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.