Correlation Between Enbridge Pref and NexGen Energy
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By analyzing existing cross correlation between Enbridge Pref 5 and NexGen Energy, you can compare the effects of market volatilities on Enbridge Pref and NexGen 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and NexGen Energy.
Diversification Opportunities for Enbridge Pref and NexGen Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enbridge and NexGen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and NexGen Energy go up and down completely randomly.
Pair Corralation between Enbridge Pref and NexGen Energy
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 6.23 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, Enbridge Pref 5 is 8.86 times less risky than NexGen Energy. It trades about 0.23 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,058 in NexGen Energy on August 28, 2024 and sell it today you would earn a total of 112.00 from holding NexGen Energy or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge Pref 5 vs. NexGen Energy
Performance |
| Timeline |
| Enbridge Pref 5 |
| NexGen Energy |
Enbridge Pref and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and NexGen Energy
The main advantage of trading using opposite Enbridge Pref and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, NexGen 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.The idea behind Enbridge Pref 5 and NexGen Energy 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.| NexGen Energy vs. Baselode Energy Corp | NexGen Energy vs. Standard Uranium | NexGen Energy vs. Skyharbour Resources | NexGen Energy vs. iShares Canadian HYBrid |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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