Correlation Between Endeavour Silver and Solaris Resources

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

Diversification Opportunities for Endeavour Silver and Solaris Resources

-0.64

Correlation Coefficient

Endeavour Silver  Solaris Resources

Excellent diversification

The 3 months correlation between Endeavour and Solaris is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Silver Corp and Solaris Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solaris Resources 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 Solaris Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solaris Resources has no effect on the direction of Endeavour Silver i.e., Endeavour Silver and Solaris Resources go up and down completely randomly.

Pair Corralation between Endeavour Silver and Solaris Resources

Considering the 90-day investment horizon Endeavour Silver is expected to generate 1.6 times less return on investment than Solaris Resources. In addition to that, Endeavour Silver is 1.12 times more volatile than Solaris Resources. It trades about 0.03 of its total potential returns per unit of risk. Solaris Resources is currently generating about 0.05 per unit of volatility. If you would invest  267.00  in Solaris Resources on September 30, 2024 and sell it today you would earn a total of  51.00  from holding Solaris Resources or generate 19.1% return on investment over 90 days.

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

Endeavour Silver Corp  vs.  Solaris Resources

Endeavour Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Endeavour Silver is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Solaris Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solaris Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Solaris Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endeavour Silver and Solaris Resources

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

The idea behind Endeavour Silver Corp and Solaris Resources 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.