Correlation Between Enbridge Pref and Baytex Energy
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By analyzing existing cross correlation between Enbridge Pref 11 and Baytex Energy Corp, you can compare the effects of market volatilities on Enbridge Pref and Baytex Energy 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 Pref with a short position of Baytex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Baytex Energy.
Diversification Opportunities for Enbridge Pref and Baytex Energy
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Enbridge and Baytex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Enbridge Pref 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 Pref 11 are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Baytex Energy go up and down completely randomly.
Pair Corralation between Enbridge Pref and Baytex Energy
Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 0.3 times more return on investment than Baytex Energy. However, Enbridge Pref 11 is 3.28 times less risky than Baytex Energy. It trades about 0.47 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.46 per unit of risk. If you would invest 1,820 in Enbridge Pref 11 on September 18, 2024 and sell it today you would earn a total of 125.00 from holding Enbridge Pref 11 or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Enbridge Pref 11 vs. Baytex Energy Corp
Performance |
| Timeline |
| Enbridge Pref 11 |
| Baytex Energy Corp |
Enbridge Pref and Baytex Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and Baytex Energy
The main advantage of trading using opposite Enbridge Pref and Baytex Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Baytex Energy 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 Baytex Energy will offset losses from the drop in Baytex Energy's long position.The idea behind Enbridge Pref 11 and Baytex Energy Corp 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.| Baytex Energy vs. Journey Energy | Baytex Energy vs. Yangarra Resources | Baytex Energy vs. Pine Cliff Energy |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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