Correlation Between Enduro Metals and WildBrain

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

Diversification Opportunities for Enduro Metals and WildBrain

0.61

Correlation Coefficient

Enduro Metals  WildBrain

Poor diversification

The 3 months correlation between Enduro and WildBrain is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Enduro Metals Corp and WildBrain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WildBrain 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 WildBrain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WildBrain has no effect on the direction of Enduro Metals i.e., Enduro Metals and WildBrain go up and down completely randomly.

Pair Corralation between Enduro Metals and WildBrain

Assuming the 90 days trading horizon Enduro Metals Corp is expected to under-perform the WildBrain. In addition to that, Enduro Metals is 1.34 times more volatile than WildBrain. It trades about -0.08 of its total potential returns per unit of risk. WildBrain is currently generating about 0.0 per unit of volatility. If you would invest  139.00  in WildBrain on September 13, 2024 and sell it today you would lose (6.00) from holding WildBrain or give up 4.32% of portfolio value over 90 days.

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

Enduro Metals Corp  vs.  WildBrain

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

WildBrain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WildBrain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, WildBrain is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enduro Metals and WildBrain

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

The idea behind Enduro Metals Corp and WildBrain 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.