Correlation Between Avance Gas and Enbridge

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

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

Diversification Opportunities for Avance Gas and Enbridge

-0.09

Correlation Coefficient

Avance Gas  Enbridge

Good diversification

The 3 months correlation between Avance and Enbridge is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Avance Gas Holding and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Avance Gas 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 Avance Gas Holding 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 Avance Gas i.e., Avance Gas and Enbridge go up and down completely randomly.

Pair Corralation between Avance Gas and Enbridge

Assuming the 90 days horizon Avance Gas Holding is expected to under-perform the Enbridge. In addition to that, Avance Gas is 7.63 times more volatile than Enbridge. It trades about -0.07 of its total potential returns per unit of risk. Enbridge is currently generating about 0.07 per unit of volatility. If you would invest  4,349  in Enbridge on October 22, 2024 and sell it today you would earn a total of  102.00  from holding Enbridge or generate 2.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

Avance Gas Holding  vs.  Enbridge

Avance Gas Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avance Gas Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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. Despite somewhat uncertain basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Avance Gas and Enbridge

The main advantage of trading using opposite Avance Gas and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avance Gas 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.

The idea behind Avance Gas Holding and Enbridge 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..