Correlation Between Mount Gibson and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both Mount Gibson 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 Mount Gibson and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Endeavour Mining PLC, you can compare the effects of market volatilities on Mount Gibson 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 Mount Gibson with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Endeavour Mining.
Diversification Opportunities for Mount Gibson and Endeavour Mining
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mount and Endeavour is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron 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 Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Endeavour Mining go up and down completely randomly.
Pair Corralation between Mount Gibson and Endeavour Mining
Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Endeavour Mining. In addition to that, Mount Gibson is 2.18 times more volatile than Endeavour Mining PLC. It trades about -0.01 of its total potential returns per unit of risk. Endeavour Mining PLC is currently generating about 0.06 per unit of volatility. If you would invest 1,432 in Endeavour Mining PLC on December 11, 2024 and sell it today you would earn a total of 524.00 from holding Endeavour Mining PLC or generate 36.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Mount Gibson Iron vs. Endeavour Mining PLC
Performance |
| Timeline |
| Mount Gibson Iron |
| Endeavour Mining PLC |
Mount Gibson and Endeavour Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Endeavour Mining
The main advantage of trading using opposite Mount Gibson and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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.| Mount Gibson vs. China Foods Limited | ||
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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