Correlation Between Givaudan and Endeavour Mining

Can any of the company-specific risk be diversified away by investing in both Givaudan 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 Givaudan and Endeavour Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Givaudan SA and Endeavour Mining Corp, you can compare the effects of market volatilities on Givaudan 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 Givaudan with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Endeavour Mining.

Diversification Opportunities for Givaudan and Endeavour Mining

0.74

Correlation Coefficient

Givaudan  Endeavour Mining

Poor diversification

The 3 months correlation between Givaudan and Endeavour is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA 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 Givaudan 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 Givaudan SA 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 Givaudan i.e., Givaudan and Endeavour Mining go up and down completely randomly.

Pair Corralation between Givaudan and Endeavour Mining

Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 2.17 times less risky than Endeavour Mining. The stock trades about -0.19 of its potential returns per unit of risk. The Endeavour Mining Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  166,100  in Endeavour Mining Corp on September 12, 2024 and sell it today you would lose (16,100) from holding Endeavour Mining Corp or give up 9.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Givaudan SA  vs.  Endeavour Mining Corp

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Endeavour Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endeavour Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Givaudan and Endeavour Mining

The main advantage of trading using opposite Givaudan and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan 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.

The idea behind Givaudan SA and Endeavour Mining Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.