Correlation Between Enbridge and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Enbridge and GoGold Resources 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 GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and GoGold Resources, you can compare the effects of market volatilities on Enbridge and GoGold Resources 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 GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and GoGold Resources.
Diversification Opportunities for Enbridge and GoGold Resources
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enbridge and GoGold is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Enbridge i.e., Enbridge and GoGold Resources go up and down completely randomly.
Pair Corralation between Enbridge and GoGold Resources
Assuming the 90 days trading horizon Enbridge is expected to generate 0.27 times more return on investment than GoGold Resources. However, Enbridge is 3.71 times less risky than GoGold Resources. It trades about -0.04 of its potential returns per unit of risk. GoGold Resources is currently generating about -0.2 per unit of risk. If you would invest 5,964 in Enbridge on September 19, 2024 and sell it today you would lose (40.00) from holding Enbridge or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. GoGold Resources
Performance |
| Timeline |
| Enbridge |
| GoGold Resources |
Enbridge and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and GoGold Resources
The main advantage of trading using opposite Enbridge and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Enbridge vs. Suncor Energy | Enbridge vs. Toronto Dominion Bank | Enbridge vs. Bank of Nova | Enbridge vs. BCE Inc |
| GoGold Resources vs. Defiance Silver Corp | GoGold Resources vs. Liberty Gold Corp | GoGold Resources vs. Dolly Varden Silver | GoGold Resources vs. Minaurum Gold |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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