Correlation Between Endo International and Enbridge
Can any of the company-specific risk be diversified away by investing in both Endo International 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 Endo International and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endo International PLC and Enbridge, you can compare the effects of market volatilities on Endo International 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 Endo International with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endo International and Enbridge.
Diversification Opportunities for Endo International and Enbridge
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Endo and Enbridge is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Endo International PLC and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Endo International 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 Endo International PLC 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 Endo International i.e., Endo International and Enbridge go up and down completely randomly.
Pair Corralation between Endo International and Enbridge
Assuming the 90 days trading horizon Endo International is expected to generate 1.08 times less return on investment than Enbridge. But when comparing it to its historical volatility, Endo International PLC is 1.26 times less risky than Enbridge. It trades about 0.47 of its potential returns per unit of risk. Enbridge is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 6,131 in Enbridge on November 1, 2024 and sell it today you would earn a total of 312.00 from holding Enbridge or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.0% |
| Values | Daily Returns |
Endo International PLC vs. Enbridge
Performance |
| Timeline |
| Endo International PLC |
| Enbridge |
Endo International and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endo International and Enbridge
The main advantage of trading using opposite Endo International and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endo International 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.| Endo International vs. Capital Drilling | Endo International vs. Eastman Chemical Co | Endo International vs. Solstad Offshore ASA | Endo International vs. Compagnie Plastic Omnium |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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