Correlation Between Enbridge Cumulative and Enbridge F

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

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

Diversification Opportunities for Enbridge Cumulative and Enbridge F

0.97

Correlation Coefficient

Enbridge Cumulative  Enbridge F

Almost no diversification

The 3 months correlation between Enbridge and Enbridge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Cumulative Red and Enbridge F Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge F Cum and Enbridge Cumulative 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 Enbridge Cumulative Red are associated (or correlated) with Enbridge F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge F Cum has no effect on the direction of Enbridge Cumulative i.e., Enbridge Cumulative and Enbridge F go up and down completely randomly.

Pair Corralation between Enbridge Cumulative and Enbridge F

Assuming the 90 days trading horizon Enbridge Cumulative Red is expected to generate 0.85 times more return on investment than Enbridge F. However, Enbridge Cumulative Red is 1.17 times less risky than Enbridge F. It trades about 0.18 of its potential returns per unit of risk. Enbridge F Cum is currently generating about 0.11 per unit of risk. If you would invest  1,794  in Enbridge Cumulative Red on October 8, 2024 and sell it today you would earn a total of  111.00  from holding Enbridge Cumulative Red or generate 6.19% return on investment over 90 days.

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

Enbridge Cumulative Red  vs.  Enbridge F Cum

Enbridge Cumulative Red

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Cumulative Red are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Enbridge Cumulative is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Enbridge F Cum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge F Cum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Enbridge F is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Enbridge Cumulative and Enbridge F

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

The idea behind Enbridge Cumulative Red and Enbridge F Cum 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.