Correlation Between Media and Endeavour Mining

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

By analyzing existing cross correlation between Media and Games and Endeavour Mining PLC, you can compare the effects of market volatilities on Media and Endeavour Mining 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 Media with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Endeavour Mining.

Diversification Opportunities for Media and Endeavour Mining

0.67

Correlation Coefficient

Media  Endeavour Mining

Poor diversification

The 3 months correlation between Media and Endeavour is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Endeavour Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining PLC and Media 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 Media and Games are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining PLC has no effect on the direction of Media i.e., Media and Endeavour Mining go up and down completely randomly.

Pair Corralation between Media and Endeavour Mining

Assuming the 90 days trading horizon Media is expected to generate 1.7 times less return on investment than Endeavour Mining. In addition to that, Media is 1.34 times more volatile than Endeavour Mining PLC. It trades about 0.05 of its total potential returns per unit of risk. Endeavour Mining PLC is currently generating about 0.11 per unit of volatility. If you would invest  1,730  in Endeavour Mining PLC on December 23, 2024 and sell it today you would earn a total of  310.00  from holding Endeavour Mining PLC or generate 17.92% return on investment over 90 days.

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

Media and Games  vs.  Endeavour Mining PLC

Media and Games

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Media and Games are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Endeavour Mining PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Endeavour Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Media and Endeavour Mining

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

The idea behind Media and Games and Endeavour Mining PLC 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.