Correlation Between Enbridge and Plains All
Can any of the company-specific risk be diversified away by investing in both Enbridge and Plains All 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 Plains All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Plains All American, you can compare the effects of market volatilities on Enbridge and Plains All 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 Plains All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Plains All.
Diversification Opportunities for Enbridge and Plains All
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enbridge and Plains is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American 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 Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Enbridge i.e., Enbridge and Plains All go up and down completely randomly.
Pair Corralation between Enbridge and Plains All
Considering the 90-day investment horizon Enbridge is expected to generate 0.6 times more return on investment than Plains All. However, Enbridge is 1.66 times less risky than Plains All. It trades about 0.17 of its potential returns per unit of risk. Plains All American is currently generating about 0.04 per unit of risk. If you would invest 3,957 in Enbridge on August 30, 2024 and sell it today you would earn a total of 333.00 from holding Enbridge or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. Plains All American
Performance |
| Timeline |
| Enbridge |
| Plains All American |
Enbridge and Plains All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Plains All
The main advantage of trading using opposite Enbridge and Plains All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Plains All 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 Plains All will offset losses from the drop in Plains All's long position.| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
| Plains All vs. Genesis Energy LP | Plains All vs. Western Midstream Partners | Plains All vs. Hess Midstream Partners | Plains All vs. Enterprise Products Partners |
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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