Correlation Between Enbridge Pref and TAG Oil
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By analyzing existing cross correlation between Enbridge Pref 5 and TAG Oil, you can compare the effects of market volatilities on Enbridge Pref and TAG Oil 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 TAG Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and TAG Oil.
Diversification Opportunities for Enbridge Pref and TAG Oil
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enbridge and TAG is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and TAG Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAG Oil 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 TAG Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAG Oil has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and TAG Oil go up and down completely randomly.
Pair Corralation between Enbridge Pref and TAG Oil
Assuming the 90 days trading horizon Enbridge Pref 5 is expected to generate 0.12 times more return on investment than TAG Oil. However, Enbridge Pref 5 is 8.64 times less risky than TAG Oil. It trades about 0.14 of its potential returns per unit of risk. TAG Oil is currently generating about -0.1 per unit of risk. If you would invest 2,104 in Enbridge Pref 5 on September 3, 2024 and sell it today you would earn a total of 291.00 from holding Enbridge Pref 5 or generate 13.83% 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. TAG Oil
Performance |
| Timeline |
| Enbridge Pref 5 |
| TAG Oil |
Enbridge Pref and TAG Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and TAG Oil
The main advantage of trading using opposite Enbridge Pref and TAG Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, TAG Oil 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 TAG Oil will offset losses from the drop in TAG Oil's long position.The idea behind Enbridge Pref 5 and TAG Oil 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.| TAG Oil vs. Southern Energy Corp | TAG Oil vs. ShaMaran Petroleum Corp | TAG Oil vs. Tenaz Energy Corp | TAG Oil vs. Hemisphere 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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