Correlation Between EOSDAC and Gold Fields

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

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

Diversification Opportunities for EOSDAC and Gold Fields

-0.61

Correlation Coefficient

EOSDAC  Gold Fields

Excellent diversification

The 3 months correlation between EOSDAC and Gold is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and Goldfinch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields and EOSDAC 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 EOSDAC are associated (or correlated) with Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of EOSDAC i.e., EOSDAC and Gold Fields go up and down completely randomly.

Pair Corralation between EOSDAC and Gold Fields

Assuming the 90 days trading horizon EOSDAC is expected to generate 0.9 times more return on investment than Gold Fields. However, EOSDAC is 1.11 times less risky than Gold Fields. It trades about -0.05 of its potential returns per unit of risk. Goldfinch is currently generating about -0.06 per unit of risk. If you would invest  0.04  in EOSDAC on January 29, 2024 and sell it today you would lose (0.01) from holding EOSDAC or give up 14.77% of portfolio value over 90 days.

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

EOSDAC  vs.  Goldfinch

EOSDAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOSDAC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for EOSDAC investors.

Gold Fields

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldfinch are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, Gold Fields exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOSDAC and Gold Fields

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

The idea behind EOSDAC and Goldfinch 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 Transaction History module to view history of all your transactions and understand their impact on performance.