Correlation Between Enbridge and Goodfood Market
Can any of the company-specific risk be diversified away by investing in both Enbridge and Goodfood Market 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 Goodfood Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and Goodfood Market Corp, you can compare the effects of market volatilities on Enbridge and Goodfood Market 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 Goodfood Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Goodfood Market.
Diversification Opportunities for Enbridge and Goodfood Market
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enbridge and Goodfood is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Goodfood Market Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfood Market Corp 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 Goodfood Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfood Market Corp has no effect on the direction of Enbridge i.e., Enbridge and Goodfood Market go up and down completely randomly.
Pair Corralation between Enbridge and Goodfood Market
Assuming the 90 days trading horizon Enbridge is expected to generate 1.44 times less return on investment than Goodfood Market. But when comparing it to its historical volatility, Enbridge is 4.79 times less risky than Goodfood Market. It trades about 0.16 of its potential returns per unit of risk. Goodfood Market Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Goodfood Market Corp on November 28, 2024 and sell it today you would earn a total of 7.00 from holding Goodfood Market Corp or generate 23.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Enbridge vs. Goodfood Market Corp
Performance |
Timeline |
Enbridge |
Goodfood Market Corp |
Enbridge and Goodfood Market Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Enbridge and Goodfood Market
The main advantage of trading using opposite Enbridge and Goodfood Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, Goodfood Market 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 Goodfood Market will offset losses from the drop in Goodfood Market's long position.Enbridge vs. Suncor Energy | ||
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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