Correlation Between Arizona Gold and Enbridge Srs

Can any of the company-specific risk be diversified away by investing in both Arizona Gold and Enbridge Srs 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 Srs 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 Srs P, you can compare the effects of market volatilities on Arizona Gold and Enbridge Srs 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 Srs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Gold and Enbridge Srs.

Diversification Opportunities for Arizona Gold and Enbridge Srs

0.72

Correlation Coefficient

Arizona Gold  Enbridge Srs

Poor diversification

The 3 months correlation between Arizona and Enbridge is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Gold Silver and Enbridge Srs P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Srs P 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 Srs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Srs P has no effect on the direction of Arizona Gold i.e., Arizona Gold and Enbridge Srs go up and down completely randomly.

Pair Corralation between Arizona Gold and Enbridge Srs

Assuming the 90 days horizon Arizona Gold Silver is expected to generate 6.54 times more return on investment than Enbridge Srs. However, Arizona Gold is 6.54 times more volatile than Enbridge Srs P. It trades about 0.09 of its potential returns per unit of risk. Enbridge Srs P is currently generating about 0.28 per unit of risk. If you would invest  45.00  in Arizona Gold Silver on October 25, 2024 and sell it today you would earn a total of  6.00  from holding Arizona Gold Silver or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arizona Gold Silver  vs.  Enbridge Srs P

Arizona Gold Silver

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arizona Gold Silver are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Arizona Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Srs P

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Srs P are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal fundamental drivers, Enbridge Srs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arizona Gold and Enbridge Srs

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

The idea behind Arizona Gold Silver and Enbridge Srs P 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.