Correlation Between Eldorado Gold and Fednat Holding

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

Diversification Opportunities for Eldorado Gold and Fednat Holding

-0.24

Correlation Coefficient

Eldorado Gold  Fednat Holding

Very good diversification

The 3 months correlation between Eldorado and Fednat is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Fednat Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fednat Holding 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 Fednat Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fednat Holding has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Fednat Holding go up and down completely randomly.

Pair Corralation between Eldorado Gold and Fednat Holding

Considering the 90-day investment horizon Eldorado Gold is expected to generate 20.01 times less return on investment than Fednat Holding. But when comparing it to its historical volatility, Eldorado Gold Corp is 15.09 times less risky than Fednat Holding. It trades about 0.06 of its potential returns per unit of risk. Fednat Holding Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Fednat Holding Co on February 3, 2024 and sell it today you would lose (33.84) from holding Fednat Holding Co or give up 99.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	37.37%
Values	Daily Returns

Eldorado Gold Corp  vs.  Fednat Holding Co

Eldorado Gold Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Eldorado Gold displayed solid returns over the last few months and may actually be approaching a breakup point.

Fednat Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fednat Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Fednat Holding is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eldorado Gold and Fednat Holding

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

The idea behind Eldorado Gold Corp and Fednat Holding Co 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.