Correlation Between Endeavour Mining and Ross Stores

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

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

Diversification Opportunities for Endeavour Mining and Ross Stores

0.11

Correlation Coefficient

Endeavour Mining  Ross Stores

Average diversification

The 3 months correlation between Endeavour and Ross is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Endeavour Mining 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 Mining Corp are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Ross Stores go up and down completely randomly.

Pair Corralation between Endeavour Mining and Ross Stores

Assuming the 90 days trading horizon Endeavour Mining is expected to generate 2.3 times less return on investment than Ross Stores. In addition to that, Endeavour Mining is 1.76 times more volatile than Ross Stores. It trades about 0.01 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.05 per unit of volatility. If you would invest  14,957  in Ross Stores on September 2, 2024 and sell it today you would earn a total of  543.00  from holding Ross Stores or generate 3.63% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  Ross Stores

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Endeavour Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ross Stores

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Endeavour Mining and Ross Stores

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

The idea behind Endeavour Mining Corp and Ross Stores 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.