Correlation Between Solid Power and Endeavour Mining

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

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

Diversification Opportunities for Solid Power and Endeavour Mining

0.52

Correlation Coefficient

Solid Power  Endeavour Mining

Very weak diversification

The 3 months correlation between Solid and Endeavour is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Solid Power 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 Solid Power 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 Solid Power 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 Solid Power i.e., Solid Power and Endeavour Mining go up and down completely randomly.

Pair Corralation between Solid Power and Endeavour Mining

Given the investment horizon of 90 days Solid Power is expected to generate 1.76 times more return on investment than Endeavour Mining. However, Solid Power is 1.76 times more volatile than Endeavour Mining Corp. It trades about 0.07 of its potential returns per unit of risk. Endeavour Mining Corp is currently generating about 0.1 per unit of risk. If you would invest  173.00  in Solid Power on March 2, 2024 and sell it today you would earn a total of  8.00  from holding Solid Power or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Solid Power  vs.  Endeavour Mining Corp

Solid Power

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Power are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Solid Power reported solid returns over the last few months and may actually be approaching a breakup point.

Endeavour Mining Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Endeavour Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solid Power and Endeavour Mining

The main advantage of trading using opposite Solid Power and Endeavour Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Power 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 Solid Power 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 Global Correlations module to find global opportunities by holding instruments from different markets.