Correlation Between Endeavour Silver and International Business

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

Diversification Opportunities for Endeavour Silver and International Business

-0.19

Correlation Coefficient

Endeavour Silver  International Business

Good diversification

The 3 months correlation between Endeavour and International is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and International Business go up and down completely randomly.

Pair Corralation between Endeavour Silver and International Business

Assuming the 90 days trading horizon Endeavour Silver Corp is expected to generate 2.64 times more return on investment than International Business. However, Endeavour Silver is 2.64 times more volatile than International Business Machines. It trades about 0.06 of its potential returns per unit of risk. International Business Machines is currently generating about 0.07 per unit of risk. If you would invest  501.00  in Endeavour Silver Corp on September 15, 2024 and sell it today you would earn a total of  56.00  from holding Endeavour Silver Corp or generate 11.18% return on investment over 90 days.

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

Endeavour Silver Corp  vs.  International Business Machine

Endeavour Silver Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Endeavour Silver displayed solid returns over the last few months and may actually be approaching a breakup point.

International Business

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, International Business may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Endeavour Silver and International Business

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

The idea behind Endeavour Silver Corp and International Business Machines 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.