Correlation Between Miton UK and Enbridge
Can any of the company-specific risk be diversified away by investing in both Miton UK 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 Miton UK and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Miton UK MicroCap and Enbridge, you can compare the effects of market volatilities on Miton UK 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 Miton UK with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miton UK and Enbridge.
Diversification Opportunities for Miton UK and Enbridge
Poor diversification
The 3 months correlation between Miton and Enbridge is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Miton UK MicroCap and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Miton UK 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 Miton UK MicroCap 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 Miton UK i.e., Miton UK and Enbridge go up and down completely randomly.
Pair Corralation between Miton UK and Enbridge
Assuming the 90 days trading horizon Miton UK MicroCap is expected to under-perform the Enbridge. But the stock apears to be less risky and, when comparing its historical volatility, Miton UK MicroCap is 1.34 times less risky than Enbridge. The stock trades about -0.18 of its potential returns per unit of risk. The Enbridge is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 5,300 in Enbridge on August 31, 2024 and sell it today you would earn a total of 700.00 from holding Enbridge or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 65.63% |
| Values | Daily Returns |
Miton UK MicroCap vs. Enbridge
Performance |
| Timeline |
| Miton UK MicroCap |
| Enbridge |
Miton UK and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Miton UK and Enbridge
The main advantage of trading using opposite Miton UK and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miton UK 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.| Miton UK vs. Spirent Communications plc | Miton UK vs. Zegona Communications Plc | Miton UK vs. Invesco Physical Silver | Miton UK vs. United Utilities Group |
| Enbridge vs. Fevertree Drinks Plc | Enbridge vs. Schroders Investment Trusts | Enbridge vs. Axfood AB | Enbridge vs. Kinnevik Investment AB |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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