Correlation Between Star Vault and Enbridge

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Can any of the company-specific risk be diversified away by investing in both Star Vault and Enbridge 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 Star Vault and Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Vault AB and Enbridge, you can compare the effects of market volatilities on Star Vault and Enbridge 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 Star Vault with a short position of Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Vault and Enbridge.

Diversification Opportunities for Star Vault and Enbridge

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Star and Enbridge is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Star Vault AB and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Star Vault 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 Star Vault AB are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Star Vault i.e., Star Vault and Enbridge go up and down completely randomly.

Pair Corralation between Star Vault and Enbridge

Assuming the 90 days horizon Star Vault AB is expected to generate 19.22 times more return on investment than Enbridge. However, Star Vault is 19.22 times more volatile than Enbridge. It trades about 0.04 of its potential returns per unit of risk. Enbridge is currently generating about 0.01 per unit of risk. If you would invest  3.00  in Star Vault AB on December 29, 2023 and sell it today you would lose (0.73) from holding Star Vault AB or give up 24.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.75%
ValuesDaily Returns

Star Vault AB  vs.  Enbridge

 Performance 
       Timeline  
Star Vault AB 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Star Vault AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Star Vault is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Enbridge 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Star Vault and Enbridge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Star Vault and Enbridge

The main advantage of trading using opposite Star Vault and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Vault position performs unexpectedly, Enbridge 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 will offset losses from the drop in Enbridge's long position.
The idea behind Star Vault AB and Enbridge 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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