Correlation Between International Game and Endeavour Mining

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

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

Diversification Opportunities for International Game and Endeavour Mining

-0.46

Correlation Coefficient

International Game  Endeavour Mining

Very good diversification

The 3 months correlation between International and Endeavour is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding International Game Technology 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 International Game 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 International Game Technology 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 International Game i.e., International Game and Endeavour Mining go up and down completely randomly.

Pair Corralation between International Game and Endeavour Mining

Assuming the 90 days horizon International Game Technology is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, International Game Technology is 1.5 times less risky than Endeavour Mining. The stock trades about -0.05 of its potential returns per unit of risk. The Endeavour Mining PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,722  in Endeavour Mining PLC on December 25, 2024 and sell it today you would earn a total of  340.00  from holding Endeavour Mining PLC or generate 19.74% return on investment over 90 days.

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

International Game Technology  vs.  Endeavour Mining PLC

International Game

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, International Game is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Endeavour Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Game and Endeavour Mining

The main advantage of trading using opposite International Game and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Game 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 International Game Technology 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.