Correlation Between Endeavour Silver and Compania

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

By analyzing existing cross correlation between Endeavour Silver Corp and Compania de Minas, you can compare the effects of market volatilities on Endeavour Silver and Compania 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 Silver with a short position of Compania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Silver and Compania.

Diversification Opportunities for Endeavour Silver and Compania

0.63

Correlation Coefficient

Endeavour Silver  Compania

Poor diversification

The 3 months correlation between Endeavour and Compania is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and Compania de Minas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania de Minas and Endeavour Silver 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 Silver Corp are associated (or correlated) with Compania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania de Minas has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and Compania go up and down completely randomly.

Pair Corralation between Endeavour Silver and Compania

Considering the 90-day investment horizon Endeavour Silver is expected to generate 1.0 times less return on investment than Compania. In addition to that, Endeavour Silver is 2.54 times more volatile than Compania de Minas. It trades about 0.09 of its total potential returns per unit of risk. Compania de Minas is currently generating about 0.22 per unit of volatility. If you would invest  1,193  in Compania de Minas on December 29, 2024 and sell it today you would earn a total of  356.00  from holding Compania de Minas or generate 29.84% return on investment over 90 days.

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

Endeavour Silver Corp  vs.  Compania de Minas

Endeavour Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Endeavour Silver disclosed solid returns over the last few months and may actually be approaching a breakup point.

Compania de Minas

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compania de Minas are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Compania displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Silver and Compania

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

The idea behind Endeavour Silver Corp and Compania de Minas 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.