Correlation Between First Majestic and Endeavour Mining

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

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

Diversification Opportunities for First Majestic and Endeavour Mining

0.69

Correlation Coefficient

First Majestic  Endeavour Mining

Poor diversification

The 3 months correlation between First and Endeavour is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Majestic Silver and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and First Majestic 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 First Majestic Silver 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 Corp has no effect on the direction of First Majestic i.e., First Majestic and Endeavour Mining go up and down completely randomly.

Pair Corralation between First Majestic and Endeavour Mining

Assuming the 90 days horizon First Majestic Silver is expected to under-perform the Endeavour Mining. In addition to that, First Majestic is 1.41 times more volatile than Endeavour Mining Corp. It trades about -0.14 of its total potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.0 per unit of volatility. If you would invest  2,691  in Endeavour Mining Corp on October 8, 2024 and sell it today you would lose (11.00) from holding Endeavour Mining Corp or give up 0.41% of portfolio value over 90 days.

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

First Majestic Silver  vs.  Endeavour Mining Corp

First Majestic Silver

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days First Majestic Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Majestic is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with First Majestic and Endeavour Mining

The main advantage of trading using opposite First Majestic and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Majestic 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 First Majestic Silver and Endeavour Mining Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.