Correlation Between Enduro Metals and Sun Peak

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

Diversification Opportunities for Enduro Metals and Sun Peak

0.86

Correlation Coefficient

Enduro Metals  Sun Peak

Very poor diversification

The 3 months correlation between Enduro and Sun is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Enduro Metals Corp and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Enduro Metals i.e., Enduro Metals and Sun Peak go up and down completely randomly.

Pair Corralation between Enduro Metals and Sun Peak

Assuming the 90 days trading horizon Enduro Metals Corp is expected to under-perform the Sun Peak. In addition to that, Enduro Metals is 1.01 times more volatile than Sun Peak Metals. It trades about -0.04 of its total potential returns per unit of risk. Sun Peak Metals is currently generating about 0.03 per unit of volatility. If you would invest  28.00  in Sun Peak Metals on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Sun Peak Metals or generate 17.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Enduro Metals Corp  vs.  Sun Peak Metals

Enduro Metals Corp

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sun Peak is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enduro Metals and Sun Peak

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

The idea behind Enduro Metals Corp and Sun Peak Metals 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.