Correlation Between Enbridge and Topaz Energy
Can any of the company-specific risk be diversified away by investing in both Enbridge and Topaz Energy 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 Topaz Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Topaz Energy Corp, you can compare the effects of market volatilities on Enbridge and Topaz Energy 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 Topaz Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Topaz Energy.
Diversification Opportunities for Enbridge and Topaz Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enbridge and Topaz is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Topaz Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topaz Energy Corp 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 Topaz Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topaz Energy Corp has no effect on the direction of Enbridge i.e., Enbridge and Topaz Energy go up and down completely randomly.
Pair Corralation between Enbridge and Topaz Energy
Considering the 90-day investment horizon Enbridge is expected to generate 1.13 times less return on investment than Topaz Energy. But when comparing it to its historical volatility, Enbridge is 1.35 times less risky than Topaz Energy. It trades about 0.07 of its potential returns per unit of risk. Topaz Energy Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,511 in Topaz Energy Corp on September 12, 2024 and sell it today you would earn a total of 432.00 from holding Topaz Energy Corp or generate 28.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Enbridge vs. Topaz Energy Corp
Performance |
| Timeline |
| Enbridge |
| Topaz Energy Corp |
Enbridge and Topaz Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Topaz Energy
The main advantage of trading using opposite Enbridge and Topaz Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Topaz Energy 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 Topaz Energy will offset losses from the drop in Topaz Energy's long position.| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
| Topaz Energy vs. Williams Companies | Topaz Energy vs. Enterprise Products Partners | Topaz Energy vs. ONEOK Inc | Topaz Energy vs. Energy Transfer LP |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |