Correlation Between Endeavour Mining and International Business

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

Diversification Opportunities for Endeavour Mining and International Business

-0.46

Correlation Coefficient

Endeavour Mining  International Business

Very good diversification

The 3 months correlation between Endeavour and International is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining PLC and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and International Business go up and down completely randomly.

Pair Corralation between Endeavour Mining and International Business

Assuming the 90 days trading horizon Endeavour Mining is expected to generate 10.53 times less return on investment than International Business. In addition to that, Endeavour Mining is 1.84 times more volatile than International Business Machines. It trades about 0.0 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.09 per unit of volatility. If you would invest  11,924  in International Business Machines on October 10, 2024 and sell it today you would earn a total of  9,906  from holding International Business Machines or generate 83.08% return on investment over 90 days.

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

Endeavour Mining PLC  vs.  International Business Machine

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.

International Business

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, International Business is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Endeavour Mining and International Business

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

The idea behind Endeavour Mining PLC and International Business Machines 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.