Correlation Between Polar Capital and Endeavour Mining

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

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

Diversification Opportunities for Polar Capital and Endeavour Mining

-0.22

Correlation Coefficient

Polar Capital  Endeavour Mining

Very good diversification

The 3 months correlation between Polar and Endeavour is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Polar Capital Technology and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and Polar Capital 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 Polar Capital Technology are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Polar Capital i.e., Polar Capital and Endeavour Mining go up and down completely randomly.

Pair Corralation between Polar Capital and Endeavour Mining

Assuming the 90 days trading horizon Polar Capital Technology is expected to generate 0.57 times more return on investment than Endeavour Mining. However, Polar Capital Technology is 1.74 times less risky than Endeavour Mining. It trades about 0.15 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.01 per unit of risk. If you would invest  29,350  in Polar Capital Technology on September 2, 2024 and sell it today you would earn a total of  4,250  from holding Polar Capital Technology or generate 14.48% return on investment over 90 days.

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

Polar Capital Technology  vs.  Endeavour Mining Corp

Polar Capital Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Polar Capital Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Polar Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Polar Capital and Endeavour Mining

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

The idea behind Polar Capital Technology and Endeavour Mining 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.