Correlation Between Excelsior Mining and Enbridge Cumulative

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

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

Diversification Opportunities for Excelsior Mining and Enbridge Cumulative

0.71

Correlation Coefficient

Excelsior Mining  Enbridge Cumulative

Poor diversification

The 3 months correlation between Excelsior and Enbridge is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Mining Corp and Enbridge Cumulative Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Cumulative Red and Excelsior 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 Excelsior Mining Corp are associated (or correlated) with Enbridge Cumulative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Cumulative Red has no effect on the direction of Excelsior Mining i.e., Excelsior Mining and Enbridge Cumulative go up and down completely randomly.

Pair Corralation between Excelsior Mining and Enbridge Cumulative

Assuming the 90 days trading horizon Excelsior Mining Corp is expected to generate 14.42 times more return on investment than Enbridge Cumulative. However, Excelsior Mining is 14.42 times more volatile than Enbridge Cumulative Red. It trades about 0.09 of its potential returns per unit of risk. Enbridge Cumulative Red is currently generating about 0.22 per unit of risk. If you would invest  16.00  in Excelsior Mining Corp on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Excelsior Mining Corp or generate 31.25% return on investment over 90 days.

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

Excelsior Mining Corp  vs.  Enbridge Cumulative Red

Excelsior Mining Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Mining Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Excelsior Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Cumulative Red

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Cumulative Red are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Enbridge Cumulative may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Excelsior Mining and Enbridge Cumulative

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

The idea behind Excelsior Mining Corp and Enbridge Cumulative Red 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.