Correlation Between Endeavour Silver and New Pacific

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

Diversification Opportunities for Endeavour Silver and New Pacific

0.86

Correlation Coefficient

Endeavour Silver  New Pacific

Very poor diversification

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

Pair Corralation between Endeavour Silver and New Pacific

Considering the 90-day investment horizon Endeavour Silver Corp is expected to generate 1.0 times more return on investment than New Pacific. However, Endeavour Silver is 1.0 times more volatile than New Pacific Metals. It trades about 0.13 of its potential returns per unit of risk. New Pacific Metals is currently generating about 0.05 per unit of risk. If you would invest  306.00  in Endeavour Silver Corp on August 30, 2024 and sell it today you would earn a total of  108.00  from holding Endeavour Silver Corp or generate 35.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Endeavour Silver Corp  vs.  New Pacific Metals

Endeavour Silver Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 10 (%) 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.

New Pacific Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in New Pacific Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, New Pacific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Silver and New Pacific

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

The idea behind Endeavour Silver Corp and New Pacific 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.