Correlation Between Enbridge and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Enbridge and SEI INVESTMENTS 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 SEI INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and SEI INVESTMENTS, you can compare the effects of market volatilities on Enbridge and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and SEI INVESTMENTS.
Diversification Opportunities for Enbridge and SEI INVESTMENTS
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enbridge and SEI is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of Enbridge i.e., Enbridge and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between Enbridge and SEI INVESTMENTS
Assuming the 90 days horizon Enbridge is expected to generate 1.0 times more return on investment than SEI INVESTMENTS. However, Enbridge is 1.0 times more volatile than SEI INVESTMENTS. It trades about 0.15 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.12 per unit of risk. If you would invest 2,968 in Enbridge on November 7, 2024 and sell it today you would earn a total of 1,214 from holding Enbridge or generate 40.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. SEI INVESTMENTS
Performance |
| Timeline |
| Enbridge |
| SEI INVESTMENTS |
Enbridge and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and SEI INVESTMENTS
The main advantage of trading using opposite Enbridge and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.| Enbridge vs. Molson Coors Beverage | Enbridge vs. China Resources Beer | Enbridge vs. TOWNSQUARE MEDIA INC | Enbridge vs. Monster Beverage Corp |
| SEI INVESTMENTS vs. Phibro Animal Health | SEI INVESTMENTS vs. CLOVER HEALTH INV | SEI INVESTMENTS vs. National Health Investors | SEI INVESTMENTS vs. INTERCONT HOTELS |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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