Correlation Between Endeavour Mining and Falcon Oil
Can any of the company-specific risk be diversified away by investing in both Endeavour Mining and Falcon Oil 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 Mining and Falcon Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endeavour Mining Corp and Falcon Oil Gas, you can compare the effects of market volatilities on Endeavour Mining and Falcon Oil 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 Mining with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Mining and Falcon Oil.
Diversification Opportunities for Endeavour Mining and Falcon Oil
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Endeavour and Falcon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Endeavour 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 Endeavour Mining Corp are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Falcon Oil go up and down completely randomly.
Pair Corralation between Endeavour Mining and Falcon Oil
Assuming the 90 days trading horizon Endeavour Mining Corp is expected to under-perform the Falcon Oil. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Mining Corp is 1.02 times less risky than Falcon Oil. The stock trades about -0.15 of its potential returns per unit of risk. The Falcon Oil Gas is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 410.00 in Falcon Oil Gas on September 22, 2024 and sell it today you would lose (25.00) from holding Falcon Oil Gas or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endeavour Mining Corp vs. Falcon Oil Gas
Performance |
| Timeline |
| Endeavour Mining Corp |
| Falcon Oil Gas |
Endeavour Mining and Falcon Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endeavour Mining and Falcon Oil
The main advantage of trading using opposite Endeavour Mining and Falcon Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Mining position performs unexpectedly, Falcon Oil 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 Falcon Oil will offset losses from the drop in Falcon Oil's long position.| Endeavour Mining vs. Givaudan SA | Endeavour Mining vs. Antofagasta PLC | Endeavour Mining vs. Ferrexpo PLC | Endeavour Mining vs. Atalaya Mining |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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