Correlation Between JSC National and Enbridge

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

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

Diversification Opportunities for JSC National and Enbridge

0.62

Correlation Coefficient

JSC National  Enbridge

Poor diversification

The 3 months correlation between JSC and Enbridge is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding JSC National Atomic and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and JSC National 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 JSC National Atomic 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 JSC National i.e., JSC National and Enbridge go up and down completely randomly.

Pair Corralation between JSC National and Enbridge

Assuming the 90 days trading horizon JSC National is expected to generate 9.02 times less return on investment than Enbridge. In addition to that, JSC National is 1.57 times more volatile than Enbridge. It trades about 0.01 of its total potential returns per unit of risk. Enbridge is currently generating about 0.17 per unit of volatility. If you would invest  5,454  in Enbridge on September 24, 2024 and sell it today you would earn a total of  459.00  from holding Enbridge or generate 8.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.88%
Values	Daily Returns

JSC National Atomic  vs.  Enbridge

JSC National Atomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JSC National Atomic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, JSC National is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Enbridge

Risk-Adjusted Performance

13 of 100

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. In spite of comparatively uncertain basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with JSC National and Enbridge

The main advantage of trading using opposite JSC National and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JSC National 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 JSC National Atomic 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.