Correlation Between Enduro Metals and Hercules Metals

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

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

Diversification Opportunities for Enduro Metals and Hercules Metals

-0.5

Correlation Coefficient

Enduro Metals  Hercules Metals

Very good diversification

The 3 months correlation between Enduro and Hercules is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enduro Metals Corp and Hercules Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Metals Corp 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 Corp are associated (or correlated) with Hercules Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Metals Corp has no effect on the direction of Enduro Metals i.e., Enduro Metals and Hercules Metals go up and down completely randomly.

Pair Corralation between Enduro Metals and Hercules Metals

Assuming the 90 days trading horizon Enduro Metals Corp is expected to under-perform the Hercules Metals. In addition to that, Enduro Metals is 1.21 times more volatile than Hercules Metals Corp. It trades about -0.03 of its total potential returns per unit of risk. Hercules Metals Corp is currently generating about 0.14 per unit of volatility. If you would invest  52.00  in Hercules Metals Corp on December 21, 2024 and sell it today you would earn a total of  20.00  from holding Hercules Metals Corp or generate 38.46% return on investment over 90 days.

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

Enduro Metals Corp  vs.  Hercules Metals Corp

Enduro Metals Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enduro Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Hercules Metals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Metals Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hercules Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enduro Metals and Hercules Metals

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

The idea behind Enduro Metals Corp and Hercules Metals Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.