Correlation Between Endeavour Mining and Foresight Environmental

Can any of the company-specific risk be diversified away by investing in both Endeavour Mining and Foresight Environmental 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 Foresight Environmental 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 Foresight Environmental Infrastructure, you can compare the effects of market volatilities on Endeavour Mining and Foresight Environmental 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 Foresight Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endeavour Mining and Foresight Environmental.

Diversification Opportunities for Endeavour Mining and Foresight Environmental

0.45

Correlation Coefficient

Endeavour Mining  Foresight Environmental

Very weak diversification

The 3 months correlation between Endeavour and Foresight is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and Foresight Environmental Infras in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foresight Environmental 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 Foresight Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foresight Environmental has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and Foresight Environmental go up and down completely randomly.

Pair Corralation between Endeavour Mining and Foresight Environmental

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to generate 1.86 times more return on investment than Foresight Environmental. However, Endeavour Mining is 1.86 times more volatile than Foresight Environmental Infrastructure. It trades about 0.03 of its potential returns per unit of risk. Foresight Environmental Infrastructure is currently generating about -0.24 per unit of risk. If you would invest  150,775  in Endeavour Mining Corp on September 5, 2024 and sell it today you would earn a total of  4,825  from holding Endeavour Mining Corp or generate 3.2% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  Foresight Environmental Infras

Endeavour Mining Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Endeavour Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Foresight Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foresight Environmental Infrastructure 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.

Pair Trading with Endeavour Mining and Foresight Environmental

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

The idea behind Endeavour Mining Corp and Foresight Environmental Infrastructure 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.