Correlation Between Endurance Gold and Centerra Gold

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

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

Diversification Opportunities for Endurance Gold and Centerra Gold

0.65

Correlation Coefficient

Endurance Gold  Centerra Gold

Poor diversification

The 3 months correlation between Endurance and Centerra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Endurance Gold and Centerra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerra Gold and Endurance Gold 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 Endurance Gold are associated (or correlated) with Centerra Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerra Gold has no effect on the direction of Endurance Gold i.e., Endurance Gold and Centerra Gold go up and down completely randomly.

Pair Corralation between Endurance Gold and Centerra Gold

Assuming the 90 days horizon Endurance Gold is expected to under-perform the Centerra Gold. In addition to that, Endurance Gold is 1.99 times more volatile than Centerra Gold. It trades about -0.03 of its total potential returns per unit of risk. Centerra Gold is currently generating about -0.05 per unit of volatility. If you would invest  655.00  in Centerra Gold on September 4, 2024 and sell it today you would lose (60.00) from holding Centerra Gold or give up 9.16% of portfolio value over 90 days.

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

Endurance Gold  vs.  Centerra Gold

Endurance Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endurance Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Centerra Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centerra Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Endurance Gold and Centerra Gold

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

The idea behind Endurance Gold and Centerra Gold 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.