Correlation Between Endeavour Mining and Vitec Software

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

Diversification Opportunities for Endeavour Mining and Vitec Software

0.72

Correlation Coefficient

Endeavour Mining  Vitec Software

Poor diversification

The 3 months correlation between Endeavour and Vitec is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group 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 Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Vitec Software go up and down completely randomly.

Pair Corralation between Endeavour Mining and Vitec Software

Assuming the 90 days trading horizon Endeavour Mining is expected to generate 4.37 times less return on investment than Vitec Software. In addition to that, Endeavour Mining is 1.15 times more volatile than Vitec Software Group. It trades about 0.04 of its total potential returns per unit of risk. Vitec Software Group is currently generating about 0.22 per unit of volatility. If you would invest  48,012  in Vitec Software Group on November 28, 2024 and sell it today you would earn a total of  13,288  from holding Vitec Software Group or generate 27.68% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  Vitec Software Group

Endeavour Mining Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Vitec Software Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vitec Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Mining and Vitec Software

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

The idea behind Endeavour Mining Corp and Vitec Software Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.