Correlation Between Enbridge and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Enbridge and Flow Traders 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 Enbridge and Flow Traders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Flow Traders NV, you can compare the effects of market volatilities on Enbridge and Flow Traders 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 Enbridge with a short position of Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Flow Traders.
Diversification Opportunities for Enbridge and Flow Traders
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enbridge and Flow is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV and Enbridge 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 Enbridge are associated (or correlated) with Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Enbridge i.e., Enbridge and Flow Traders go up and down completely randomly.
Pair Corralation between Enbridge and Flow Traders
Assuming the 90 days trading horizon Enbridge is expected to generate 0.48 times more return on investment than Flow Traders. However, Enbridge is 2.1 times less risky than Flow Traders. It trades about 0.25 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.03 per unit of risk. If you would invest 4,880 in Enbridge on September 3, 2024 and sell it today you would earn a total of 1,120 from holding Enbridge or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 55.41% |
| Values | Daily Returns |
Enbridge vs. Flow Traders NV
Performance |
| Timeline |
| Enbridge |
| Flow Traders NV |
Enbridge and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Flow Traders
The main advantage of trading using opposite Enbridge and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Enbridge vs. Flow Traders NV | Enbridge vs. Grieg Seafood | Enbridge vs. Elmos Semiconductor SE | Enbridge vs. Ebro Foods |
| Flow Traders vs. Check Point Software | Flow Traders vs. SMA Solar Technology | Flow Traders vs. Microchip Technology | Flow Traders vs. Uber Technologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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