Correlation Between Endurance Motive and Vale SA
Can any of the company-specific risk be diversified away by investing in both Endurance Motive and Vale SA 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 Endurance Motive and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endurance Motive SA and Vale SA, you can compare the effects of market volatilities on Endurance Motive and Vale SA 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 Endurance Motive with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endurance Motive and Vale SA.
Diversification Opportunities for Endurance Motive and Vale SA
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Endurance and Vale is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Endurance Motive SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA and Endurance Motive 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 Endurance Motive SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Endurance Motive i.e., Endurance Motive and Vale SA go up and down completely randomly.
Pair Corralation between Endurance Motive and Vale SA
Assuming the 90 days trading horizon Endurance Motive SA is expected to generate 0.73 times more return on investment than Vale SA. However, Endurance Motive SA is 1.38 times less risky than Vale SA. It trades about -0.24 of its potential returns per unit of risk. Vale SA is currently generating about -0.18 per unit of risk. If you would invest 120.00 in Endurance Motive SA on January 18, 2025 and sell it today you would lose (14.00) from holding Endurance Motive SA or give up 11.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endurance Motive SA vs. Vale SA
Performance |
| Timeline |
| Endurance Motive |
| Vale SA |
Endurance Motive and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endurance Motive and Vale SA
The main advantage of trading using opposite Endurance Motive and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endurance Motive position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Endurance Motive vs. Media Investment Optimization | Endurance Motive vs. Millenium Hotels Real | Endurance Motive vs. Elaia Investment Spain | Endurance Motive vs. Bankinter |
| Vale SA vs. Arrienda Rental Properties | Vale SA vs. Melia Hotels | Vale SA vs. Plasticos Compuestos SA | Vale SA vs. All Iron Re |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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