Correlation Between American Public and Endeavour Mining

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

By analyzing existing cross correlation between American Public Education and Endeavour Mining PLC, you can compare the effects of market volatilities on American Public and Endeavour Mining 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 American Public with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Public and Endeavour Mining.

Diversification Opportunities for American Public and Endeavour Mining

-0.89

Correlation Coefficient

American Public  Endeavour Mining

Pay attention - limited upside

The 3 months correlation between American and Endeavour is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Public Education and Endeavour Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining PLC and American Public 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 American Public Education are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining PLC has no effect on the direction of American Public i.e., American Public and Endeavour Mining go up and down completely randomly.

Pair Corralation between American Public and Endeavour Mining

Assuming the 90 days horizon American Public Education is expected to generate 1.31 times more return on investment than Endeavour Mining. However, American Public is 1.31 times more volatile than Endeavour Mining PLC. It trades about 0.0 of its potential returns per unit of risk. Endeavour Mining PLC is currently generating about -0.08 per unit of risk. If you would invest  1,980  in American Public Education on October 11, 2024 and sell it today you would lose (10.00) from holding American Public Education or give up 0.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

American Public Education  vs.  Endeavour Mining PLC

American Public Education

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Public Education are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, American Public reported solid returns over the last few months and may actually be approaching a breakup point.

Endeavour Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with American Public and Endeavour Mining

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

The idea behind American Public Education and Endeavour Mining PLC 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.