Correlation Between Enbridge and JSC National

Can any of the company-specific risk be diversified away by investing in both Enbridge and JSC National 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 Enbridge and JSC National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enbridge and JSC National Atomic, you can compare the effects of market volatilities on Enbridge and JSC National 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 Enbridge with a short position of JSC National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and JSC National.

Diversification Opportunities for Enbridge and JSC National

0.62

Correlation Coefficient

Enbridge  JSC National

Poor diversification

The 3 months correlation between Enbridge and JSC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and JSC National Atomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSC National Atomic and Enbridge 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 Enbridge are associated (or correlated) with JSC National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSC National Atomic has no effect on the direction of Enbridge i.e., Enbridge and JSC National go up and down completely randomly.

Pair Corralation between Enbridge and JSC National

Assuming the 90 days trading horizon Enbridge is expected to generate 0.64 times more return on investment than JSC National. However, Enbridge is 1.56 times less risky than JSC National. It trades about 0.16 of its potential returns per unit of risk. JSC National Atomic is currently generating about 0.01 per unit of risk. If you would invest  5,454  in Enbridge on September 24, 2024 and sell it today you would earn a total of  416.00  from holding Enbridge or generate 7.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.31%
Values	Daily Returns

Enbridge  vs.  JSC National Atomic

Enbridge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JSC National Atomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSC National Atomic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, JSC National is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Enbridge and JSC National

The main advantage of trading using opposite Enbridge and JSC National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, JSC National 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 JSC National will offset losses from the drop in JSC National's long position.

The idea behind Enbridge and JSC National Atomic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.