Correlation Between Goliath Resources and Enduro Metals

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

By analyzing existing cross correlation between Goliath Resources and Enduro Metals Corp, you can compare the effects of market volatilities on Goliath Resources and Enduro Metals 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 Goliath Resources with a short position of Enduro Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goliath Resources and Enduro Metals.

Diversification Opportunities for Goliath Resources and Enduro Metals

-0.17

Correlation Coefficient

Goliath Resources  Enduro Metals

Good diversification

The 3 months correlation between Goliath and Enduro is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Goliath Resources and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals Corp and Goliath Resources 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 Goliath Resources are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of Goliath Resources i.e., Goliath Resources and Enduro Metals go up and down completely randomly.

Pair Corralation between Goliath Resources and Enduro Metals

Assuming the 90 days horizon Goliath Resources is expected to generate 1.29 times more return on investment than Enduro Metals. However, Goliath Resources is 1.29 times more volatile than Enduro Metals Corp. It trades about 0.13 of its potential returns per unit of risk. Enduro Metals Corp is currently generating about 0.01 per unit of risk. If you would invest  108.00  in Goliath Resources on December 1, 2024 and sell it today you would earn a total of  57.00  from holding Goliath Resources or generate 52.78% return on investment over 90 days.

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

Goliath Resources  vs.  Enduro Metals Corp

Goliath Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goliath Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goliath Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Enduro Metals Corp

Risk-Adjusted Performance

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 fairly stable fundamental indicators, Enduro Metals 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 Goliath Resources and Enduro Metals

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

The idea behind Goliath Resources and Enduro Metals Corp 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 Valuation module to check real value of public entities based on technical and fundamental data.