Correlation Between Endeavour Mining and Darden Restaurants

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

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

Diversification Opportunities for Endeavour Mining and Darden Restaurants

-0.49

Correlation Coefficient

Endeavour Mining  Darden Restaurants

Very good diversification

The 3 months correlation between Endeavour and Darden is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and Endeavour Mining 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 Endeavour Mining Corp are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Darden Restaurants go up and down completely randomly.

Pair Corralation between Endeavour Mining and Darden Restaurants

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to under-perform the Darden Restaurants. But the stock apears to be less risky and, when comparing its historical volatility, Endeavour Mining Corp is 1.08 times less risky than Darden Restaurants. The stock trades about -0.17 of its potential returns per unit of risk. The Darden Restaurants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  17,071  in Darden Restaurants on September 22, 2024 and sell it today you would earn a total of  1,627  from holding Darden Restaurants or generate 9.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Endeavour Mining Corp  vs.  Darden Restaurants

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Darden Restaurants

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Darden Restaurants are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Darden Restaurants may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Endeavour Mining and Darden Restaurants

The main advantage of trading using opposite Endeavour Mining and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endeavour Mining position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.

The idea behind Endeavour Mining Corp and Darden Restaurants 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..