Correlation Between Endeavour Mining and Edinburgh Investment

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

Diversification Opportunities for Endeavour Mining and Edinburgh Investment

-0.41

Correlation Coefficient

Endeavour Mining  Edinburgh Investment

Very good diversification

The 3 months correlation between Endeavour and Edinburgh is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Edinburgh Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Investment 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 Edinburgh Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Investment has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Edinburgh Investment go up and down completely randomly.

Pair Corralation between Endeavour Mining and Edinburgh Investment

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to under-perform the Edinburgh Investment. In addition to that, Endeavour Mining is 2.99 times more volatile than Edinburgh Investment Trust. It trades about -0.11 of its total potential returns per unit of risk. Edinburgh Investment Trust is currently generating about 0.07 per unit of volatility. If you would invest  73,004  in Edinburgh Investment Trust on October 27, 2024 and sell it today you would earn a total of  2,196  from holding Edinburgh Investment Trust or generate 3.01% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  Edinburgh Investment Trust

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Edinburgh Investment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Edinburgh Investment Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Edinburgh Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Endeavour Mining and Edinburgh Investment

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

The idea behind Endeavour Mining Corp and Edinburgh Investment Trust 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.