Correlation Between Enbridge and NTG Clarity
Can any of the company-specific risk be diversified away by investing in both Enbridge and NTG Clarity 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 NTG Clarity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and NTG Clarity Networks, you can compare the effects of market volatilities on Enbridge and NTG Clarity 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 NTG Clarity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and NTG Clarity.
Diversification Opportunities for Enbridge and NTG Clarity
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enbridge and NTG is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and NTG Clarity Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Clarity Networks 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 NTG Clarity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Clarity Networks has no effect on the direction of Enbridge i.e., Enbridge and NTG Clarity go up and down completely randomly.
Pair Corralation between Enbridge and NTG Clarity
Assuming the 90 days trading horizon Enbridge is expected to generate 5.0 times less return on investment than NTG Clarity. But when comparing it to its historical volatility, Enbridge is 5.57 times less risky than NTG Clarity. It trades about 0.18 of its potential returns per unit of risk. NTG Clarity Networks is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 118.00 in NTG Clarity Networks on November 6, 2024 and sell it today you would earn a total of 62.00 from holding NTG Clarity Networks or generate 52.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. NTG Clarity Networks
Performance |
| Timeline |
| Enbridge |
| NTG Clarity Networks |
Enbridge and NTG Clarity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and NTG Clarity
The main advantage of trading using opposite Enbridge and NTG Clarity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, NTG Clarity 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 NTG Clarity will offset losses from the drop in NTG Clarity's long position.| Enbridge vs. Suncor Energy | Enbridge vs. Toronto Dominion Bank | Enbridge vs. Bank of Nova | Enbridge vs. BCE Inc |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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