Correlation Between Summa Silver and Enduro Metals

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

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

Diversification Opportunities for Summa Silver and Enduro Metals

0.76

Correlation Coefficient

Summa Silver  Enduro Metals

Poor diversification

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

Pair Corralation between Summa Silver and Enduro Metals

Assuming the 90 days horizon Summa Silver Corp is expected to generate 0.81 times more return on investment than Enduro Metals. However, Summa Silver Corp is 1.23 times less risky than Enduro Metals. It trades about -0.07 of its potential returns per unit of risk. Enduro Metals is currently generating about -0.07 per unit of risk. If you would invest  26.00  in Summa Silver Corp on August 31, 2024 and sell it today you would lose (6.00) from holding Summa Silver Corp or give up 23.08% of portfolio value over 90 days.

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

Summa Silver Corp  vs.  Enduro Metals

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Enduro Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enduro Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Summa Silver and Enduro Metals

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

The idea behind Summa Silver Corp and Enduro Metals 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.