Correlation Between Enbridge and Western Midstream
Can any of the company-specific risk be diversified away by investing in both Enbridge and Western Midstream 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 Western Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Western Midstream Partners, you can compare the effects of market volatilities on Enbridge and Western Midstream 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 Western Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Western Midstream.
Diversification Opportunities for Enbridge and Western Midstream
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Enbridge and Western is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Western Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of Enbridge i.e., Enbridge and Western Midstream go up and down completely randomly.
Pair Corralation between Enbridge and Western Midstream
Considering the 90-day investment horizon Enbridge is expected to generate 0.55 times more return on investment than Western Midstream. However, Enbridge is 1.81 times less risky than Western Midstream. It trades about 0.37 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.14 per unit of risk. If you would invest 4,025 in Enbridge on August 27, 2024 and sell it today you would earn a total of 301.00 from holding Enbridge or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge vs. Western Midstream Partners
Performance |
| Timeline |
| Enbridge |
| Western Midstream |
Enbridge and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge and Western Midstream
The main advantage of trading using opposite Enbridge and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Western Midstream 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 Western Midstream will offset losses from the drop in Western Midstream's long position.| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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