Correlation Between Southern California and Enbridge
Can any of the company-specific risk be diversified away by investing in both Southern California 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 Southern California and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern California Gas and Enbridge, you can compare the effects of market volatilities on Southern California 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 Southern California with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern California and Enbridge.
Diversification Opportunities for Southern California and Enbridge
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Enbridge is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Southern California Gas and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Southern California 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 Southern California Gas 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 Southern California i.e., Southern California and Enbridge go up and down completely randomly.
Pair Corralation between Southern California and Enbridge
Assuming the 90 days horizon Southern California Gas is expected to generate 3.87 times more return on investment than Enbridge. However, Southern California is 3.87 times more volatile than Enbridge. It trades about 0.02 of its potential returns per unit of risk. Enbridge is currently generating about 0.0 per unit of risk. If you would invest 2,619 in Southern California Gas on October 7, 2024 and sell it today you would earn a total of 6.00 from holding Southern California Gas or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern California Gas vs. Enbridge
Performance |
| Timeline |
| Southern California Gas |
| Enbridge |
Southern California and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern California and Enbridge
The main advantage of trading using opposite Southern California and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern California 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.| Southern California vs. Dynagas LNG Partners | Southern California vs. GasLog Partners LP | Southern California vs. GasLog Partners LP | Southern California vs. Genesis Energy LP |
| Enbridge vs. Energy Transfer LP | Enbridge vs. Kinder Morgan | Enbridge vs. MPLX LP | Enbridge vs. Pembina Pipeline Corp |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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