Correlation Between Endeavour Silver and Eros Resources

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

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

Diversification Opportunities for Endeavour Silver and Eros Resources

0.64

Correlation Coefficient

Endeavour Silver  Eros Resources

Poor diversification

The 3 months correlation between Endeavour and Eros is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp and Endeavour Silver 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 Silver Corp are associated (or correlated) with Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and Eros Resources go up and down completely randomly.

Pair Corralation between Endeavour Silver and Eros Resources

Assuming the 90 days trading horizon Endeavour Silver Corp is expected to under-perform the Eros Resources. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Silver Corp is 2.0 times less risky than Eros Resources. The stock trades about -0.1 of its potential returns per unit of risk. The Eros Resources Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Eros Resources Corp on September 4, 2024 and sell it today you would lose (0.50) from holding Eros Resources Corp or give up 10.0% of portfolio value over 90 days.

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

Endeavour Silver Corp  vs.  Eros Resources Corp

Endeavour Silver Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Endeavour Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

Eros Resources Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eros Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Eros Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Silver and Eros Resources

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

The idea behind Endeavour Silver Corp and Eros Resources 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.