Correlation Between XLMedia PLC and Enbridge

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

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

Diversification Opportunities for XLMedia PLC and Enbridge

0.51

Correlation Coefficient

XLMedia PLC  Enbridge

Very weak diversification

The 3 months correlation between XLMedia and Enbridge is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Enbridge go up and down completely randomly.

Pair Corralation between XLMedia PLC and Enbridge

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 10.55 times less return on investment than Enbridge. In addition to that, XLMedia PLC is 4.36 times more volatile than Enbridge. It trades about 0.0 of its total potential returns per unit of risk. Enbridge is currently generating about 0.17 per unit of volatility. If you would invest  5,409  in Enbridge on September 23, 2024 and sell it today you would earn a total of  461.00  from holding Enbridge or generate 8.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.7%
Values	Daily Returns

XLMedia PLC  vs.  Enbridge

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 XLMedia PLC and Enbridge

The main advantage of trading using opposite XLMedia PLC and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.