Correlation Between Endeavour Mining and Equinix

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

Diversification Opportunities for Endeavour Mining and Equinix

-0.77

Correlation Coefficient

Endeavour Mining  Equinix

Pay attention - limited upside

The 3 months correlation between Endeavour and Equinix is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and Equinix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinix 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 Equinix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinix has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Equinix go up and down completely randomly.

Pair Corralation between Endeavour Mining and Equinix

Assuming the 90 days trading horizon Endeavour Mining PLC is expected to generate 1.23 times more return on investment than Equinix. However, Endeavour Mining is 1.23 times more volatile than Equinix. It trades about -0.01 of its potential returns per unit of risk. Equinix is currently generating about -0.06 per unit of risk. If you would invest  1,825  in Endeavour Mining PLC on October 8, 2024 and sell it today you would lose (12.00) from holding Endeavour Mining PLC or give up 0.66% of portfolio value over 90 days.

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

Endeavour Mining PLC  vs.  Equinix

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 uncertain 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.

Equinix

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Equinix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Mining and Equinix

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

The idea behind Endeavour Mining PLC and Equinix 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.