Correlation Between Kinnevik Investment and Enbridge
Can any of the company-specific risk be diversified away by investing in both Kinnevik Investment and Enbridge 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 Kinnevik Investment and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinnevik Investment AB and Enbridge, you can compare the effects of market volatilities on Kinnevik Investment and Enbridge 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 Kinnevik Investment with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinnevik Investment and Enbridge.
Diversification Opportunities for Kinnevik Investment and Enbridge
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinnevik and Enbridge is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinnevik Investment AB and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Kinnevik Investment 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 Kinnevik Investment AB are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Kinnevik Investment i.e., Kinnevik Investment and Enbridge go up and down completely randomly.
Pair Corralation between Kinnevik Investment and Enbridge
Assuming the 90 days trading horizon Kinnevik Investment AB is expected to generate 1.06 times more return on investment than Enbridge. However, Kinnevik Investment is 1.06 times more volatile than Enbridge. It trades about 0.08 of its potential returns per unit of risk. Enbridge is currently generating about -0.34 per unit of risk. If you would invest 8,621 in Kinnevik Investment AB on November 29, 2024 and sell it today you would earn a total of 187.00 from holding Kinnevik Investment AB or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Kinnevik Investment AB vs. Enbridge
Performance |
| Timeline |
| Kinnevik Investment |
| Enbridge |
Kinnevik Investment and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinnevik Investment and Enbridge
The main advantage of trading using opposite Kinnevik Investment and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinnevik Investment position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Kinnevik Investment vs. Central Asia Metals | Kinnevik Investment vs. One Media iP | Kinnevik Investment vs. Live Nation Entertainment | Kinnevik Investment vs. Wheaton Precious Metals |
| Enbridge vs. Darden Restaurants | Enbridge vs. Veolia Environnement VE | Enbridge vs. Seche Environnement SA | Enbridge vs. Various Eateries 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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