Correlation Between Enbridge Pref and Arrow Exploration
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By analyzing existing cross correlation between Enbridge Pref 5 and Arrow Exploration Corp, you can compare the effects of market volatilities on Enbridge Pref and Arrow Exploration 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 Arrow Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Arrow Exploration.
Diversification Opportunities for Enbridge Pref and Arrow Exploration
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enbridge and Arrow is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and Arrow Exploration Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Exploration 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 5 are associated (or correlated) with Arrow Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Exploration Corp has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Arrow Exploration go up and down completely randomly.
Pair Corralation between Enbridge Pref and Arrow Exploration
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 1.62 times less return on investment than Arrow Exploration. But when comparing it to its historical volatility, Enbridge Pref 5 is 5.69 times less risky than Arrow Exploration. It trades about 0.14 of its potential returns per unit of risk. Arrow Exploration Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Arrow Exploration Corp on September 3, 2024 and sell it today you would earn a total of 5.00 from holding Arrow Exploration Corp or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.8% |
| Values | Daily Returns |
Enbridge Pref 5 vs. Arrow Exploration Corp
Performance |
| Timeline |
| Enbridge Pref 5 |
| Arrow Exploration Corp |
Enbridge Pref and Arrow Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and Arrow Exploration
The main advantage of trading using opposite Enbridge Pref and Arrow Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Arrow Exploration 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 Arrow Exploration will offset losses from the drop in Arrow Exploration's long position.The idea behind Enbridge Pref 5 and Arrow Exploration 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.| Arrow Exploration vs. Southern Energy Corp | Arrow Exploration vs. Hemisphere Energy | Arrow Exploration vs. Prairie Provident Resources | Arrow Exploration vs. Vital 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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