Correlation Between Endeavour Mining and Visa

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

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

Diversification Opportunities for Endeavour Mining and Visa

-0.87

Correlation Coefficient

Endeavour Mining  Visa

Pay attention - limited upside

The 3 months correlation between Endeavour and Visa is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and Endeavour Mining 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 Endeavour Mining PLC are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Visa go up and down completely randomly.

Pair Corralation between Endeavour Mining and Visa

Assuming the 90 days trading horizon Endeavour Mining is expected to generate 8.36 times less return on investment than Visa. In addition to that, Endeavour Mining is 2.41 times more volatile than Visa Inc. It trades about 0.0 of its total potential returns per unit of risk. Visa Inc is currently generating about 0.08 per unit of volatility. If you would invest  20,020  in Visa Inc on October 9, 2024 and sell it today you would earn a total of  10,165  from holding Visa Inc or generate 50.77% return on investment over 90 days.

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

Endeavour Mining PLC  vs.  Visa Inc

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.

Visa Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Visa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Mining and Visa

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

The idea behind Endeavour Mining PLC and Visa Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.