Correlation Between Ithaca Energy and Enbridge
Can any of the company-specific risk be diversified away by investing in both Ithaca Energy and Enbridge 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 Ithaca Energy and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ithaca Energy PLC and Enbridge, you can compare the effects of market volatilities on Ithaca Energy and Enbridge 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 Ithaca Energy with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ithaca Energy and Enbridge.
Diversification Opportunities for Ithaca Energy and Enbridge
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ithaca and Enbridge is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ithaca Energy PLC and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Ithaca Energy 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 Ithaca Energy PLC are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Ithaca Energy i.e., Ithaca Energy and Enbridge go up and down completely randomly.
Pair Corralation between Ithaca Energy and Enbridge
Assuming the 90 days trading horizon Ithaca Energy PLC is expected to generate 2.34 times more return on investment than Enbridge. However, Ithaca Energy is 2.34 times more volatile than Enbridge. It trades about 0.89 of its potential returns per unit of risk. Enbridge is currently generating about 0.82 per unit of risk. If you would invest 10,400 in Ithaca Energy PLC on October 20, 2024 and sell it today you would earn a total of 3,840 from holding Ithaca Energy PLC or generate 36.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 70.0% |
| Values | Daily Returns |
Ithaca Energy PLC vs. Enbridge
Performance |
| Timeline |
| Ithaca Energy PLC |
| Enbridge |
Ithaca Energy and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ithaca Energy and Enbridge
The main advantage of trading using opposite Ithaca Energy and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ithaca Energy position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Ithaca Energy vs. Seraphim Space Investment | Ithaca Energy vs. Playtech Plc | Ithaca Energy vs. BE Semiconductor Industries | Ithaca Energy vs. Chrysalis Investments |
| Enbridge vs. Catalyst Media Group | Enbridge vs. Bloomsbury Publishing Plc | Enbridge vs. JD Sports Fashion | Enbridge vs. Host Hotels Resorts |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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