Correlation Between Astar and Enbridge Pref
Can any of the company-specific risk be diversified away by investing in both Astar and Enbridge Pref 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 Astar and Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Enbridge Pref 3, you can compare the effects of market volatilities on Astar and Enbridge Pref 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 Astar with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Enbridge Pref.
Diversification Opportunities for Astar and Enbridge Pref
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Astar and Enbridge is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Enbridge Pref 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 3 and Astar 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 Astar are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 3 has no effect on the direction of Astar i.e., Astar and Enbridge Pref go up and down completely randomly.
Pair Corralation between Astar and Enbridge Pref
Assuming the 90 days trading horizon Astar is expected to under-perform the Enbridge Pref. In addition to that, Astar is 9.24 times more volatile than Enbridge Pref 3. It trades about -0.18 of its total potential returns per unit of risk. Enbridge Pref 3 is currently generating about 0.24 per unit of volatility. If you would invest 1,847 in Enbridge Pref 3 on October 12, 2024 and sell it today you would earn a total of 49.00 from holding Enbridge Pref 3 or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Astar vs. Enbridge Pref 3
Performance |
| Timeline |
| Astar |
| Enbridge Pref 3 |
Astar and Enbridge Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Enbridge Pref
The main advantage of trading using opposite Astar and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Enbridge Pref 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 Pref will offset losses from the drop in Enbridge Pref's long position.The idea behind Astar and Enbridge Pref 3 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Enbridge Pref vs. Marimaca Copper Corp | Enbridge Pref vs. Pace Metals | Enbridge Pref vs. Metalero Mining Corp | Enbridge Pref vs. Homerun Resources |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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