Correlation Between Compania and Endeavour Silver

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

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

Diversification Opportunities for Compania and Endeavour Silver

0.26

Correlation Coefficient

Compania  Endeavour Silver

Modest diversification

The 3 months correlation between Compania and Endeavour is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Compania de Minas and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp and Compania 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 Compania de Minas are associated (or correlated) with Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of Compania i.e., Compania and Endeavour Silver go up and down completely randomly.

Pair Corralation between Compania and Endeavour Silver

Considering the 90-day investment horizon Compania is expected to generate 10.23 times less return on investment than Endeavour Silver. But when comparing it to its historical volatility, Compania de Minas is 1.8 times less risky than Endeavour Silver. It trades about 0.03 of its potential returns per unit of risk. Endeavour Silver Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  281.00  in Endeavour Silver Corp on September 2, 2024 and sell it today you would earn a total of  140.00  from holding Endeavour Silver Corp or generate 49.82% return on investment over 90 days.

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

Compania de Minas  vs.  Endeavour Silver Corp

Compania de Minas

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Compania is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Endeavour Silver Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Endeavour Silver disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compania and Endeavour Silver

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

The idea behind Compania de Minas and Endeavour Silver 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.