Correlation Between Dairy Farm and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Endeavour Mining PLC, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Endeavour Mining.
Diversification Opportunities for Dairy Farm and Endeavour Mining
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dairy and Endeavour is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International 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 Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Endeavour Mining go up and down completely randomly.
Pair Corralation between Dairy Farm and Endeavour Mining
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, Dairy Farm International is 1.01 times less risky than Endeavour Mining. The stock trades about -0.09 of its potential returns per unit of risk. The Endeavour Mining PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,769 in Endeavour Mining PLC on October 27, 2024 and sell it today you would earn a total of 68.00 from holding Endeavour Mining PLC or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Endeavour Mining PLC
Performance |
| Timeline |
| Dairy Farm International |
| Endeavour Mining PLC |
Dairy Farm and Endeavour Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Endeavour Mining
The main advantage of trading using opposite Dairy Farm and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. Telecom Argentina SA | Dairy Farm vs. American Airlines Group | Dairy Farm vs. AEGEAN AIRLINES | Dairy Farm vs. Nok Airlines PCL |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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