Correlation Between ARC Resources and Enbridge H
Can any of the company-specific risk be diversified away by investing in both ARC Resources and Enbridge H 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 ARC Resources and Enbridge H into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARC Resources and Enbridge H Cum, you can compare the effects of market volatilities on ARC Resources and Enbridge H 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 ARC Resources with a short position of Enbridge H. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARC Resources and Enbridge H.
Diversification Opportunities for ARC Resources and Enbridge H
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ARC and Enbridge is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ARC Resources and Enbridge H Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge H Cum and ARC Resources 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 ARC Resources are associated (or correlated) with Enbridge H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge H Cum has no effect on the direction of ARC Resources i.e., ARC Resources and Enbridge H go up and down completely randomly.
Pair Corralation between ARC Resources and Enbridge H
Assuming the 90 days trading horizon ARC Resources is expected to generate 2.28 times more return on investment than Enbridge H. However, ARC Resources is 2.28 times more volatile than Enbridge H Cum. It trades about 0.07 of its potential returns per unit of risk. Enbridge H Cum is currently generating about 0.12 per unit of risk. If you would invest 1,459 in ARC Resources on December 11, 2024 and sell it today you would earn a total of 1,042 from holding ARC Resources or generate 71.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARC Resources vs. Enbridge H Cum
Performance |
| Timeline |
| ARC Resources |
| Enbridge H Cum |
ARC Resources and Enbridge H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARC Resources and Enbridge H
The main advantage of trading using opposite ARC Resources and Enbridge H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARC Resources position performs unexpectedly, Enbridge H 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 H will offset losses from the drop in Enbridge H's long position.| ARC Resources vs. Tourmaline Oil Corp | ARC Resources vs. Whitecap Resources | ARC Resources vs. MEG Energy Corp | ARC Resources vs. Vermilion Energy |
| Enbridge H vs. Wilmington Capital Management | Enbridge H vs. TUT Fitness Group | Enbridge H vs. Mako Mining Corp | Enbridge H vs. Brookfield Asset Management |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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