Correlation Between Safety Insurance and Enbridge
Can any of the company-specific risk be diversified away by investing in both Safety Insurance 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 Safety Insurance and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and Enbridge, you can compare the effects of market volatilities on Safety Insurance 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 Safety Insurance with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Enbridge.
Diversification Opportunities for Safety Insurance and Enbridge
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and Enbridge is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Safety Insurance 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 Safety Insurance Group 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 Safety Insurance i.e., Safety Insurance and Enbridge go up and down completely randomly.
Pair Corralation between Safety Insurance and Enbridge
Assuming the 90 days horizon Safety Insurance is expected to generate 1.8 times less return on investment than Enbridge. In addition to that, Safety Insurance is 1.35 times more volatile than Enbridge. It trades about 0.02 of its total potential returns per unit of risk. Enbridge is currently generating about 0.05 per unit of volatility. If you would invest 3,094 in Enbridge on October 11, 2024 and sell it today you would earn a total of 1,021 from holding Enbridge or generate 33.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. Enbridge
Performance |
| Timeline |
| Safety Insurance |
| Enbridge |
Safety Insurance and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Enbridge
The main advantage of trading using opposite Safety Insurance and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance 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.| Safety Insurance vs. Scottish Mortgage Investment | Safety Insurance vs. NEW MILLENNIUM IRON | Safety Insurance vs. Nippon Steel | Safety Insurance vs. DIVERSIFIED ROYALTY |
| Enbridge vs. SBI Insurance Group | Enbridge vs. Safety Insurance Group | Enbridge vs. United Rentals | Enbridge vs. HANOVER INSURANCE |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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