Correlation Between First Quantum and Eldorado Gold

Can any of the company-specific risk be diversified away by investing in both First Quantum and Eldorado Gold 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 First Quantum and Eldorado Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Quantum Minerals and Eldorado Gold Corp, you can compare the effects of market volatilities on First Quantum and Eldorado Gold 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 First Quantum with a short position of Eldorado Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Eldorado Gold.

Diversification Opportunities for First Quantum and Eldorado Gold

0.39

Correlation Coefficient

First Quantum  Eldorado Gold

Weak diversification

The 3 months correlation between First and Eldorado is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Eldorado Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldorado Gold Corp and First Quantum 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 First Quantum Minerals are associated (or correlated) with Eldorado Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldorado Gold Corp has no effect on the direction of First Quantum i.e., First Quantum and Eldorado Gold go up and down completely randomly.

Pair Corralation between First Quantum and Eldorado Gold

Assuming the 90 days horizon First Quantum Minerals is expected to generate 0.96 times more return on investment than Eldorado Gold. However, First Quantum Minerals is 1.05 times less risky than Eldorado Gold. It trades about 0.25 of its potential returns per unit of risk. Eldorado Gold Corp is currently generating about 0.01 per unit of risk. If you would invest  1,666  in First Quantum Minerals on April 22, 2025 and sell it today you would earn a total of  673.00  from holding First Quantum Minerals or generate 40.4% return on investment over 90 days.

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

First Quantum Minerals  vs.  Eldorado Gold Corp

First Quantum Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Eldorado Gold Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eldorado Gold Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy 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.

Pair Trading with First Quantum and Eldorado Gold

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

The idea behind First Quantum Minerals and Eldorado Gold Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.