Correlation Between Globex Mining and Enbridge H

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

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

Diversification Opportunities for Globex Mining and Enbridge H

0.75

Correlation Coefficient

Globex Mining  Enbridge H

Poor diversification

The 3 months correlation between Globex and Enbridge is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Enbridge H Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge H Cum and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Enbridge H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge H Cum has no effect on the direction of Globex Mining i.e., Globex Mining and Enbridge H go up and down completely randomly.

Pair Corralation between Globex Mining and Enbridge H

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 2.94 times more return on investment than Enbridge H. However, Globex Mining is 2.94 times more volatile than Enbridge H Cum. It trades about 0.04 of its potential returns per unit of risk. Enbridge H Cum is currently generating about 0.1 per unit of risk. If you would invest  93.00  in Globex Mining Enterprises on October 21, 2024 and sell it today you would earn a total of  37.00  from holding Globex Mining Enterprises or generate 39.78% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Enbridge H Cum

Globex Mining Enterprises

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Globex Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge H Cum

Risk-Adjusted Performance

22 of 100

Solid

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

Pair Trading with Globex Mining and Enbridge H

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

The idea behind Globex Mining Enterprises and Enbridge H Cum 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.