Correlation Between Endeavour Mining and CHEVRON CDR

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

Diversification Opportunities for Endeavour Mining and CHEVRON CDR

-0.71

Correlation Coefficient

Endeavour Mining  CHEVRON CDR

Pay attention - limited upside

The 3 months correlation between Endeavour and CHEVRON is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Endeavour Mining Corp and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR 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 CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of Endeavour Mining i.e., Endeavour Mining and CHEVRON CDR go up and down completely randomly.

Pair Corralation between Endeavour Mining and CHEVRON CDR

Assuming the 90 days trading horizon Endeavour Mining Corp is expected to under-perform the CHEVRON CDR. In addition to that, Endeavour Mining is 2.17 times more volatile than CHEVRON CDR. It trades about -0.13 of its total potential returns per unit of risk. CHEVRON CDR is currently generating about 0.12 per unit of volatility. If you would invest  1,958  in CHEVRON CDR on September 13, 2024 and sell it today you would earn a total of  109.00  from holding CHEVRON CDR or generate 5.57% return on investment over 90 days.

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

Endeavour Mining Corp  vs.  CHEVRON CDR

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CHEVRON CDR

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHEVRON CDR are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CHEVRON CDR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Endeavour Mining and CHEVRON CDR

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

The idea behind Endeavour Mining Corp and CHEVRON CDR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.