Correlation Between Enbridge and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both Enbridge and Keg Royalties 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 Keg Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and The Keg Royalties, you can compare the effects of market volatilities on Enbridge and Keg Royalties 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 Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Keg Royalties.
Diversification Opportunities for Enbridge and Keg Royalties
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enbridge and Keg is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Enbridge i.e., Enbridge and Keg Royalties go up and down completely randomly.
Pair Corralation between Enbridge and Keg Royalties
Assuming the 90 days trading horizon Enbridge is expected to under-perform the Keg Royalties. In addition to that, Enbridge is 1.11 times more volatile than The Keg Royalties. It trades about -0.08 of its total potential returns per unit of risk. The Keg Royalties is currently generating about 0.03 per unit of volatility. If you would invest 1,389 in The Keg Royalties on December 4, 2024 and sell it today you would earn a total of 9.00 from holding The Keg Royalties or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. The Keg Royalties
Performance |
| Timeline |
| Enbridge |
| Keg Royalties |
Enbridge and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Keg Royalties
The main advantage of trading using opposite Enbridge and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' long position.| Enbridge vs. Suncor Energy | ||
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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