Correlation Between Eldorado Gold and PHILIP

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

Diversification Opportunities for Eldorado Gold and PHILIP

0.36

Correlation Coefficient

Eldorado Gold  PHILIP

Weak diversification

The 3 months correlation between Eldorado and PHILIP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and PHILIP MORRIS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTL 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 PHILIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILIP MORRIS INTL has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and PHILIP go up and down completely randomly.

Pair Corralation between Eldorado Gold and PHILIP

Considering the 90-day investment horizon Eldorado Gold Corp is expected to under-perform the PHILIP. In addition to that, Eldorado Gold is 2.59 times more volatile than PHILIP MORRIS INTL. It trades about -0.1 of its total potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about -0.2 per unit of volatility. If you would invest  9,759  in PHILIP MORRIS INTL on September 25, 2024 and sell it today you would lose (1,140) from holding PHILIP MORRIS INTL or give up 11.68% of portfolio value over 90 days.

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

Eldorado Gold Corp  vs.  PHILIP MORRIS INTL

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.

PHILIP MORRIS INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILIP MORRIS INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PHILIP MORRIS INTL investors.

Pair Trading with Eldorado Gold and PHILIP

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

The idea behind Eldorado Gold Corp and PHILIP MORRIS INTL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.