Correlation Between Endeavour Mining and Homerun Resources

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

Diversification Opportunities for Endeavour Mining and Homerun Resources

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between Endeavour and Homerun is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Homerun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homerun Resources 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 Homerun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homerun Resources has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Homerun Resources go up and down completely randomly.

Pair Corralation between Endeavour Mining and Homerun Resources

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to under-perform the Homerun Resources. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Mining Corp is 2.53 times less risky than Homerun Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Homerun Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Homerun Resources on October 9, 2024 and sell it today you would earn a total of  55.00  from holding Homerun Resources or generate 77.46% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Endeavour Mining Corp  vs.  Homerun Resources

 Performance 
       Timeline  
Endeavour Mining Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Homerun Resources 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Homerun Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Homerun Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Endeavour Mining and Homerun Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Endeavour Mining and Homerun Resources

The main advantage of trading using opposite Endeavour Mining and Homerun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Mining position performs unexpectedly, Homerun Resources 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 Homerun Resources will offset losses from the drop in Homerun Resources' long position.
The idea behind Endeavour Mining Corp and Homerun Resources 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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