Correlation Between PHN Multi and Enbridge Pref

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

By analyzing existing cross correlation between PHN Multi Style All Cap and Enbridge Pref Series, you can compare the effects of market volatilities on PHN Multi and Enbridge Pref 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 PHN Multi with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of PHN Multi and Enbridge Pref.

Diversification Opportunities for PHN Multi and Enbridge Pref

-0.8

Correlation Coefficient

PHN Multi  Enbridge Pref

Pay attention - limited upside

The 3 months correlation between PHN and Enbridge is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding PHN Multi Style All Cap and Enbridge Pref Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref Series and PHN Multi 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 PHN Multi Style All Cap are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref Series has no effect on the direction of PHN Multi i.e., PHN Multi and Enbridge Pref go up and down completely randomly.

Pair Corralation between PHN Multi and Enbridge Pref

Assuming the 90 days trading horizon PHN Multi Style All Cap is expected to generate 0.82 times more return on investment than Enbridge Pref. However, PHN Multi Style All Cap is 1.22 times less risky than Enbridge Pref. It trades about 0.12 of its potential returns per unit of risk. Enbridge Pref Series is currently generating about 0.08 per unit of risk. If you would invest  2,222  in PHN Multi Style All Cap on September 22, 2024 and sell it today you would earn a total of  647.00  from holding PHN Multi Style All Cap or generate 29.12% return on investment over 90 days.

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

PHN Multi Style All Cap  vs.  Enbridge Pref Series

PHN Multi Style

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Multi Style All Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, PHN Multi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Enbridge Pref Series

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PHN Multi and Enbridge Pref

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

The idea behind PHN Multi Style All Cap and Enbridge Pref Series 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.