Correlation Between Brixton Metals and Enduro Metals

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

By analyzing existing cross correlation between Brixton Metals and Enduro Metals, you can compare the effects of market volatilities on Brixton Metals and Enduro Metals 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 Brixton Metals with a short position of Enduro Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brixton Metals and Enduro Metals.

Diversification Opportunities for Brixton Metals and Enduro Metals

0.87

Correlation Coefficient

Brixton Metals  Enduro Metals

Very poor diversification

The 3 months correlation between Brixton and Enduro is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Brixton Metals and Enduro Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals and Brixton Metals 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 Brixton Metals are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals has no effect on the direction of Brixton Metals i.e., Brixton Metals and Enduro Metals go up and down completely randomly.

Pair Corralation between Brixton Metals and Enduro Metals

Assuming the 90 days horizon Brixton Metals is expected to generate 0.82 times more return on investment than Enduro Metals. However, Brixton Metals is 1.23 times less risky than Enduro Metals. It trades about -0.03 of its potential returns per unit of risk. Enduro Metals is currently generating about -0.04 per unit of risk. If you would invest  20.00  in Brixton Metals on September 13, 2024 and sell it today you would lose (15.02) from holding Brixton Metals or give up 75.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Brixton Metals  vs.  Enduro Metals

Brixton Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brixton Metals 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Enduro Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enduro Metals 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 primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Brixton Metals and Enduro Metals

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

The idea behind Brixton Metals and Enduro Metals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.