Correlation Between Capital Drilling and Enbridge
Can any of the company-specific risk be diversified away by investing in both Capital Drilling 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 Capital Drilling and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Drilling and Enbridge, you can compare the effects of market volatilities on Capital Drilling 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 Capital Drilling with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Drilling and Enbridge.
Diversification Opportunities for Capital Drilling and Enbridge
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capital and Enbridge is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Capital Drilling 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 Capital Drilling 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 Capital Drilling i.e., Capital Drilling and Enbridge go up and down completely randomly.
Pair Corralation between Capital Drilling and Enbridge
Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Enbridge. In addition to that, Capital Drilling is 1.63 times more volatile than Enbridge. It trades about -0.07 of its total potential returns per unit of risk. Enbridge is currently generating about 0.3 per unit of volatility. If you would invest 5,611 in Enbridge on August 29, 2024 and sell it today you would earn a total of 367.00 from holding Enbridge or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.91% |
| Values | Daily Returns |
Capital Drilling vs. Enbridge
Performance |
| Timeline |
| Capital Drilling |
| Enbridge |
Capital Drilling and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Drilling and Enbridge
The main advantage of trading using opposite Capital Drilling and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Drilling 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.| Capital Drilling vs. Zoom Video Communications | Capital Drilling vs. Lendinvest PLC | Capital Drilling vs. Neometals | Capital Drilling vs. Coor Service Management |
| Enbridge vs. Zoom Video Communications | Enbridge vs. Lendinvest PLC | Enbridge vs. Neometals | Enbridge vs. Coor Service 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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