Correlation Between Enbridge and Caledonia Investments
Can any of the company-specific risk be diversified away by investing in both Enbridge and Caledonia Investments 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 Caledonia Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Caledonia Investments, you can compare the effects of market volatilities on Enbridge and Caledonia Investments 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 Caledonia Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Caledonia Investments.
Diversification Opportunities for Enbridge and Caledonia Investments
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Enbridge and Caledonia is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Caledonia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Investments 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 Caledonia Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Investments has no effect on the direction of Enbridge i.e., Enbridge and Caledonia Investments go up and down completely randomly.
Pair Corralation between Enbridge and Caledonia Investments
Assuming the 90 days trading horizon Enbridge is expected to generate 1.05 times more return on investment than Caledonia Investments. However, Enbridge is 1.05 times more volatile than Caledonia Investments. It trades about 0.09 of its potential returns per unit of risk. Caledonia Investments is currently generating about 0.02 per unit of risk. If you would invest 4,724 in Enbridge on November 2, 2024 and sell it today you would earn a total of 1,719 from holding Enbridge or generate 36.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 53.82% |
| Values | Daily Returns |
Enbridge vs. Caledonia Investments
Performance |
| Timeline |
| Enbridge |
| Caledonia Investments |
Enbridge and Caledonia Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Caledonia Investments
The main advantage of trading using opposite Enbridge and Caledonia Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Caledonia Investments 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 Caledonia Investments will offset losses from the drop in Caledonia Investments' long position.| Enbridge vs. Molson Coors Beverage | Enbridge vs. Associated British Foods | Enbridge vs. Polar Capital Technology | Enbridge vs. Check Point Software |
| Caledonia Investments vs. Cornish Metals | Caledonia Investments vs. GreenX Metals | Caledonia Investments vs. European Metals Holdings | Caledonia Investments vs. Ryanair Holdings plc |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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