Correlation Between Albion Technology and Enbridge
Can any of the company-specific risk be diversified away by investing in both Albion Technology 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 Albion Technology and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Albion Technology General and Enbridge, you can compare the effects of market volatilities on Albion Technology 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 Albion Technology with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albion Technology and Enbridge.
Diversification Opportunities for Albion Technology and Enbridge
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Albion and Enbridge is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Albion Technology General and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Albion Technology 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 Albion Technology General 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 Albion Technology i.e., Albion Technology and Enbridge go up and down completely randomly.
Pair Corralation between Albion Technology and Enbridge
Assuming the 90 days trading horizon Albion Technology is expected to generate 7.71 times less return on investment than Enbridge. But when comparing it to its historical volatility, Albion Technology General is 1.11 times less risky than Enbridge. It trades about 0.04 of its potential returns per unit of risk. Enbridge is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 4,760 in Enbridge on September 1, 2024 and sell it today you would earn a total of 1,240 from holding Enbridge or generate 26.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 59.69% |
| Values | Daily Returns |
Albion Technology General vs. Enbridge
Performance |
| Timeline |
| Albion Technology General |
| Enbridge |
Albion Technology and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Albion Technology and Enbridge
The main advantage of trading using opposite Albion Technology and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Albion Technology 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.| Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Samsung Electronics Co | Albion Technology vs. Toyota Motor Corp | Albion Technology vs. Reliance Industries Ltd |
| Enbridge vs. Sealed Air Corp | Enbridge vs. Porvair plc | Enbridge vs. Systemair AB | Enbridge vs. Greenroc Mining 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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