Correlation Between Gold Royalty and Endeavour Silver

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

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

Diversification Opportunities for Gold Royalty and Endeavour Silver

0.76

Correlation Coefficient

Gold Royalty  Endeavour Silver

Poor diversification

The 3 months correlation between Gold and Endeavour is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gold Royalty Corp and Endeavour Silver Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Silver Corp and Gold Royalty 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 Gold Royalty Corp are associated (or correlated) with Endeavour Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Silver Corp has no effect on the direction of Gold Royalty i.e., Gold Royalty and Endeavour Silver go up and down completely randomly.

Pair Corralation between Gold Royalty and Endeavour Silver

Given the investment horizon of 90 days Gold Royalty is expected to generate 13.93 times less return on investment than Endeavour Silver. But when comparing it to its historical volatility, Gold Royalty Corp is 1.45 times less risky than Endeavour Silver. It trades about 0.02 of its potential returns per unit of risk. Endeavour Silver Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  281.00  in Endeavour Silver Corp on August 31, 2024 and sell it today you would earn a total of  140.00  from holding Endeavour Silver Corp or generate 49.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Gold Royalty Corp  vs.  Endeavour Silver Corp

Gold Royalty Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Royalty Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Gold Royalty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Endeavour Silver Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Silver Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Endeavour Silver disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Royalty and Endeavour Silver

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

The idea behind Gold Royalty Corp and Endeavour Silver 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.