Correlation Between Enbridge and Western Copper
Can any of the company-specific risk be diversified away by investing in both Enbridge and Western Copper 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 Enbridge and Western Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Western Copper and, you can compare the effects of market volatilities on Enbridge and Western Copper 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 Enbridge with a short position of Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Western Copper.
Diversification Opportunities for Enbridge and Western Copper
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Enbridge and Western is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper and Enbridge 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 Enbridge are associated (or correlated) with Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of Enbridge i.e., Enbridge and Western Copper go up and down completely randomly.
Pair Corralation between Enbridge and Western Copper
Assuming the 90 days horizon Enbridge is expected to generate 0.39 times more return on investment than Western Copper. However, Enbridge is 2.55 times less risky than Western Copper. It trades about 0.06 of its potential returns per unit of risk. Western Copper and is currently generating about -0.02 per unit of risk. If you would invest 3,038 in Enbridge on September 12, 2024 and sell it today you would earn a total of 1,030 from holding Enbridge or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. Western Copper and
Performance |
| Timeline |
| Enbridge |
| Western Copper |
Enbridge and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Western Copper
The main advantage of trading using opposite Enbridge and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| Enbridge vs. Western Copper and | Enbridge vs. ALBIS LEASING AG | Enbridge vs. Zijin Mining Group | Enbridge vs. AAC TECHNOLOGHLDGADR |
| Western Copper vs. BHP Group Limited | Western Copper vs. Vale SA | Western Copper vs. Superior Plus Corp | Western Copper vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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