Correlation Between Enbridge and URU Metals
Can any of the company-specific risk be diversified away by investing in both Enbridge and URU 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 Enbridge and URU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and URU Metals, you can compare the effects of market volatilities on Enbridge and URU 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 Enbridge with a short position of URU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and URU Metals.
Diversification Opportunities for Enbridge and URU Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enbridge and URU is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals 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 URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of Enbridge i.e., Enbridge and URU Metals go up and down completely randomly.
Pair Corralation between Enbridge and URU Metals
Assuming the 90 days trading horizon Enbridge is expected to generate 2.35 times less return on investment than URU Metals. But when comparing it to its historical volatility, Enbridge is 5.7 times less risky than URU Metals. It trades about 0.08 of its potential returns per unit of risk. URU Metals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,000 in URU Metals on September 19, 2024 and sell it today you would earn a total of 1,000.00 from holding URU Metals or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 56.46% |
| Values | Daily Returns |
Enbridge vs. URU Metals
Performance |
| Timeline |
| Enbridge |
| URU Metals |
Enbridge and URU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and URU Metals
The main advantage of trading using opposite Enbridge and URU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, URU 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 URU Metals will offset losses from the drop in URU Metals' long position.| Enbridge vs. Zoom Video Communications | Enbridge vs. Endo International PLC | Enbridge vs. DS Smith PLC | Enbridge vs. Rolls Royce Holdings PLC |
| URU Metals vs. Zoom Video Communications | URU Metals vs. Enbridge | URU Metals vs. Endo International PLC | URU Metals vs. DS Smith 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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