Correlation Between Enterprise and High Arctic
Can any of the company-specific risk be diversified away by investing in both Enterprise and High Arctic 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 Enterprise and High Arctic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enterprise Group and High Arctic Energy, you can compare the effects of market volatilities on Enterprise and High Arctic 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 Enterprise with a short position of High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enterprise and High Arctic.
Diversification Opportunities for Enterprise and High Arctic
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Enterprise and High is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Enterprise Group and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy and Enterprise 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 Enterprise Group are associated (or correlated) with High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of Enterprise i.e., Enterprise and High Arctic go up and down completely randomly.
Pair Corralation between Enterprise and High Arctic
Assuming the 90 days horizon Enterprise Group is expected to generate 0.92 times more return on investment than High Arctic. However, Enterprise Group is 1.09 times less risky than High Arctic. It trades about 0.1 of its potential returns per unit of risk. High Arctic Energy is currently generating about -0.05 per unit of risk. If you would invest 28.00 in Enterprise Group on December 1, 2024 and sell it today you would earn a total of 116.00 from holding Enterprise Group or generate 414.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.86% |
| Values | Daily Returns |
Enterprise Group vs. High Arctic Energy
Performance |
| Timeline |
| Enterprise Group |
| High Arctic Energy |
Enterprise and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enterprise and High Arctic
The main advantage of trading using opposite Enterprise and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enterprise position performs unexpectedly, High Arctic 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 High Arctic will offset losses from the drop in High Arctic's long position.| Enterprise vs. Bri Chem Corp | Enterprise vs. High Arctic Energy | Enterprise vs. CES Energy Solutions | Enterprise vs. Mccoy Global |
| High Arctic vs. TerraVest Industries | High Arctic vs. Enterprise Group | High Arctic vs. Total Energy Services | High Arctic vs. Trican Well Service |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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