Correlation Between Enduro Metals and GoGold Resources

Can any of the company-specific risk be diversified away by investing in both Enduro Metals and GoGold 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 Enduro Metals and GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enduro Metals and GoGold Resources, you can compare the effects of market volatilities on Enduro Metals and GoGold 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 Enduro Metals with a short position of GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enduro Metals and GoGold Resources.

Diversification Opportunities for Enduro Metals and GoGold Resources

-0.15

Correlation Coefficient

Enduro Metals  GoGold Resources

Good diversification

The 3 months correlation between Enduro and GoGold is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Enduro Metals and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources and Enduro Metals 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 Enduro Metals are associated (or correlated) with GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Enduro Metals i.e., Enduro Metals and GoGold Resources go up and down completely randomly.

Pair Corralation between Enduro Metals and GoGold Resources

Assuming the 90 days horizon Enduro Metals is expected to under-perform the GoGold Resources. In addition to that, Enduro Metals is 1.13 times more volatile than GoGold Resources. It trades about -0.11 of its total potential returns per unit of risk. GoGold Resources is currently generating about 0.01 per unit of volatility. If you would invest  105.00  in GoGold Resources on December 4, 2024 and sell it today you would earn a total of  0.00  from holding GoGold Resources or generate 0.0% return on investment over 90 days.

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

Enduro Metals  vs.  GoGold Resources

Enduro Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enduro Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Enduro Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

GoGold Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GoGold Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, GoGold Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enduro Metals and GoGold Resources

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

The idea behind Enduro Metals and GoGold 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.