Correlation Between Endeavour Mining and COMPASS PATHW

Can any of the company-specific risk be diversified away by investing in both Endeavour Mining and COMPASS PATHW 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 COMPASS PATHW 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 COMPASS PATHW SPADR, you can compare the effects of market volatilities on Endeavour Mining and COMPASS PATHW 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 COMPASS PATHW. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Mining and COMPASS PATHW.

Diversification Opportunities for Endeavour Mining and COMPASS PATHW

0.1

Correlation Coefficient

Endeavour Mining  COMPASS PATHW

Average diversification

The 3 months correlation between Endeavour and COMPASS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and COMPASS PATHW SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS PATHW SPADR 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 COMPASS PATHW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS PATHW SPADR has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and COMPASS PATHW go up and down completely randomly.

Pair Corralation between Endeavour Mining and COMPASS PATHW

Assuming the 90 days trading horizon Endeavour Mining PLC is expected to generate 0.44 times more return on investment than COMPASS PATHW. However, Endeavour Mining PLC is 2.26 times less risky than COMPASS PATHW. It trades about 0.11 of its potential returns per unit of risk. COMPASS PATHW SPADR is currently generating about -0.05 per unit of risk. If you would invest  1,730  in Endeavour Mining PLC on December 23, 2024 and sell it today you would earn a total of  310.00  from holding Endeavour Mining PLC or generate 17.92% return on investment over 90 days.

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

Endeavour Mining PLC  vs.  COMPASS PATHW SPADR

Endeavour Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Endeavour Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

COMPASS PATHW SPADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days COMPASS PATHW SPADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Endeavour Mining and COMPASS PATHW

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

The idea behind Endeavour Mining PLC and COMPASS PATHW SPADR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.