Correlation Between North American and Enduro Metals
Can any of the company-specific risk be diversified away by investing in both North American and Enduro Metals 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 North American and Enduro Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Enduro Metals Corp, you can compare the effects of market volatilities on North American and Enduro Metals 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 North American with a short position of Enduro Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Enduro Metals.
Diversification Opportunities for North American and Enduro Metals
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Enduro is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Enduro Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enduro Metals Corp and North American 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 North American Financial are associated (or correlated) with Enduro Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enduro Metals Corp has no effect on the direction of North American i.e., North American and Enduro Metals go up and down completely randomly.
Pair Corralation between North American and Enduro Metals
Assuming the 90 days trading horizon North American Financial is expected to generate 0.33 times more return on investment than Enduro Metals. However, North American Financial is 3.0 times less risky than Enduro Metals. It trades about 0.32 of its potential returns per unit of risk. Enduro Metals Corp is currently generating about -0.21 per unit of risk. If you would invest 668.00 in North American Financial on September 2, 2024 and sell it today you would earn a total of 84.00 from holding North American Financial or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
North American Financial vs. Enduro Metals Corp
Performance |
| Timeline |
| North American Financial |
| Enduro Metals Corp |
North American and Enduro Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Enduro Metals
The main advantage of trading using opposite North American and Enduro Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Enduro Metals 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 Enduro Metals will offset losses from the drop in Enduro Metals' long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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