Correlation Between Endeavour Silver and Fortuna Silver

Can any of the company-specific risk be diversified away by investing in both Endeavour Silver and Fortuna 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 Endeavour Silver and Fortuna Silver 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 Fortuna Silver Mines, you can compare the effects of market volatilities on Endeavour Silver and Fortuna 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 Endeavour Silver with a short position of Fortuna Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Silver and Fortuna Silver.

Diversification Opportunities for Endeavour Silver and Fortuna Silver

0.52

Correlation Coefficient

Endeavour Silver  Fortuna Silver

Very weak diversification

The 3 months correlation between Endeavour and Fortuna is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and Fortuna Silver Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortuna Silver Mines 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 Fortuna Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortuna Silver Mines has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and Fortuna Silver go up and down completely randomly.

Pair Corralation between Endeavour Silver and Fortuna Silver

Assuming the 90 days trading horizon Endeavour Silver Corp is expected to under-perform the Fortuna Silver. In addition to that, Endeavour Silver is 1.09 times more volatile than Fortuna Silver Mines. It trades about -0.02 of its total potential returns per unit of risk. Fortuna Silver Mines is currently generating about 0.05 per unit of volatility. If you would invest  677.00  in Fortuna Silver Mines on November 20, 2024 and sell it today you would earn a total of  54.00  from holding Fortuna Silver Mines or generate 7.98% return on investment over 90 days.

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

Endeavour Silver Corp  vs.  Fortuna Silver Mines

Endeavour Silver Corp

Risk-Adjusted Performance

Very Weak

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

Fortuna Silver Mines

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortuna Silver Mines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Fortuna Silver may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Endeavour Silver and Fortuna Silver

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

The idea behind Endeavour Silver Corp and Fortuna Silver Mines 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.