Correlation Between Sun Residential and Enbridge H
Can any of the company-specific risk be diversified away by investing in both Sun Residential and Enbridge H 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 Sun Residential and Enbridge H into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Residential Real and Enbridge H Cum, you can compare the effects of market volatilities on Sun Residential and Enbridge H 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 Sun Residential with a short position of Enbridge H. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Residential and Enbridge H.
Diversification Opportunities for Sun Residential and Enbridge H
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sun and Enbridge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sun Residential Real and Enbridge H Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge H Cum and Sun Residential 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 Sun Residential Real are associated (or correlated) with Enbridge H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge H Cum has no effect on the direction of Sun Residential i.e., Sun Residential and Enbridge H go up and down completely randomly.
Pair Corralation between Sun Residential and Enbridge H
Assuming the 90 days trading horizon Sun Residential Real is expected to generate 11.1 times more return on investment than Enbridge H. However, Sun Residential is 11.1 times more volatile than Enbridge H Cum. It trades about 0.11 of its potential returns per unit of risk. Enbridge H Cum is currently generating about 0.11 per unit of risk. If you would invest 5.00 in Sun Residential Real on November 6, 2024 and sell it today you would earn a total of 0.50 from holding Sun Residential Real or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Sun Residential Real vs. Enbridge H Cum
Performance |
| Timeline |
| Sun Residential Real |
| Enbridge H Cum |
Sun Residential and Enbridge H Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Residential and Enbridge H
The main advantage of trading using opposite Sun Residential and Enbridge H positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Residential position performs unexpectedly, Enbridge H 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 H will offset losses from the drop in Enbridge H's long position.| Sun Residential vs. UnitedHealth Group CDR | Sun Residential vs. Postmedia Network Canada | Sun Residential vs. Data Communications Management | Sun Residential vs. AGF Management Limited |
| Enbridge H vs. XXIX Metal Corp | Enbridge H vs. Maple Leaf Foods | Enbridge H vs. Champion Gaming Group | Enbridge H vs. Calibre Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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