Correlation Between National Bank and Endeavour Mining
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Endeavour Mining Corp, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Endeavour Mining.
Diversification Opportunities for National Bank and Endeavour Mining
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Endeavour is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and National Bank 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 National Bank of 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 Corp has no effect on the direction of National Bank i.e., National Bank and Endeavour Mining go up and down completely randomly.
Pair Corralation between National Bank and Endeavour Mining
Assuming the 90 days trading horizon National Bank of is expected to generate 0.33 times more return on investment than Endeavour Mining. However, National Bank of is 3.05 times less risky than Endeavour Mining. It trades about 0.11 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.01 per unit of risk. If you would invest 1,819 in National Bank of on September 3, 2024 and sell it today you would earn a total of 806.00 from holding National Bank of or generate 44.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Endeavour Mining Corp
Performance |
| Timeline |
| National Bank |
| Endeavour Mining Corp |
National Bank and Endeavour Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Endeavour Mining
The main advantage of trading using opposite National Bank and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Apple Inc CDR | National Bank vs. Microsoft Corp CDR | National Bank vs. Amazon CDR | National Bank vs. Alphabet Inc CDR |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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