Correlation Between Arizona Gold and Enbridge Pref

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

By analyzing existing cross correlation between Arizona Gold Silver and Enbridge Pref 13, you can compare the effects of market volatilities on Arizona Gold 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 Arizona Gold with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Gold and Enbridge Pref.

Diversification Opportunities for Arizona Gold and Enbridge Pref

0.43

Correlation Coefficient

Arizona Gold  Enbridge Pref

Very weak diversification

The 3 months correlation between Arizona and Enbridge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Gold Silver and Enbridge Pref 13 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 13 and Arizona Gold 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 Arizona Gold Silver 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 13 has no effect on the direction of Arizona Gold i.e., Arizona Gold and Enbridge Pref go up and down completely randomly.

Pair Corralation between Arizona Gold and Enbridge Pref

Assuming the 90 days horizon Arizona Gold Silver is expected to generate 5.36 times more return on investment than Enbridge Pref. However, Arizona Gold is 5.36 times more volatile than Enbridge Pref 13. It trades about 0.11 of its potential returns per unit of risk. Enbridge Pref 13 is currently generating about 0.12 per unit of risk. If you would invest  33.00  in Arizona Gold Silver on October 4, 2024 and sell it today you would earn a total of  17.00  from holding Arizona Gold Silver or generate 51.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.75%
Values	Daily Returns

Arizona Gold Silver  vs.  Enbridge Pref 13

Arizona Gold Silver

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Gold Silver are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arizona Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Pref 13

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 13 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arizona Gold and Enbridge Pref

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

The idea behind Arizona Gold Silver and Enbridge Pref 13 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.