Correlation Between Source Rock and Enbridge Pref
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By analyzing existing cross correlation between Source Rock Royalties and Enbridge Pref 5, you can compare the effects of market volatilities on Source Rock and Enbridge Pref 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 Source Rock with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Source Rock and Enbridge Pref.
Diversification Opportunities for Source Rock and Enbridge Pref
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Source and Enbridge is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Source Rock Royalties and Enbridge Pref 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 5 and Source Rock 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 Source Rock Royalties are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 5 has no effect on the direction of Source Rock i.e., Source Rock and Enbridge Pref go up and down completely randomly.
Pair Corralation between Source Rock and Enbridge Pref
Assuming the 90 days horizon Source Rock is expected to generate 1.15 times less return on investment than Enbridge Pref. In addition to that, Source Rock is 2.49 times more volatile than Enbridge Pref 5. It trades about 0.04 of its total potential returns per unit of risk. Enbridge Pref 5 is currently generating about 0.11 per unit of volatility. If you would invest 1,983 in Enbridge Pref 5 on September 14, 2024 and sell it today you would earn a total of 408.00 from holding Enbridge Pref 5 or generate 20.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.88% |
| Values | Daily Returns |
Source Rock Royalties vs. Enbridge Pref 5
Performance |
| Timeline |
| Source Rock Royalties |
| Enbridge Pref 5 |
Source Rock and Enbridge Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Source Rock and Enbridge Pref
The main advantage of trading using opposite Source Rock and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Source Rock position performs unexpectedly, Enbridge Pref 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 Pref will offset losses from the drop in Enbridge Pref's long position.| Source Rock vs. Enbridge Pref 5 | Source Rock vs. Enbridge Pref 11 | Source Rock vs. Enbridge Pref L | Source Rock vs. E Split Corp |
| Enbridge Pref vs. Overactive Media Corp | Enbridge Pref vs. Postmedia Network Canada | Enbridge Pref vs. Richelieu Hardware | Enbridge Pref vs. East Side Games |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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