Correlation Between Caledonia Mining and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Endeavour Mining Corp, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Endeavour Mining.
Diversification Opportunities for Caledonia Mining and Endeavour Mining
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caledonia and Endeavour is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and Caledonia Mining 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 Caledonia Mining 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 Corp has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Endeavour Mining go up and down completely randomly.
Pair Corralation between Caledonia Mining and Endeavour Mining
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, Caledonia Mining is 1.01 times less risky than Endeavour Mining. The stock trades about -0.07 of its potential returns per unit of risk. The Endeavour Mining Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 166,100 in Endeavour Mining Corp on September 12, 2024 and sell it today you would lose (7,200) from holding Endeavour Mining Corp or give up 4.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Caledonia Mining vs. Endeavour Mining Corp
Performance |
| Timeline |
| Caledonia Mining |
| Endeavour Mining Corp |
Caledonia Mining and Endeavour Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Endeavour Mining
The main advantage of trading using opposite Caledonia Mining and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Sabre Insurance Group | Caledonia Mining vs. Prudential Financial | Caledonia Mining vs. Sligro Food Group | Caledonia Mining vs. Royal Bank of |
| Endeavour Mining vs. McEwen Mining | Endeavour Mining vs. Applied Materials | Endeavour Mining vs. Wheaton Precious Metals | Endeavour Mining vs. Bisichi Mining PLC |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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