Correlation Between Enbridge F and Enbridge Cumulative

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

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

Diversification Opportunities for Enbridge F and Enbridge Cumulative

0.98

Correlation Coefficient

Enbridge F  Enbridge Cumulative

Almost no diversification

The 3 months correlation between Enbridge and Enbridge is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge F Cum and Enbridge Cumulative Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Cumulative Red and Enbridge F 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 F Cum are associated (or correlated) with Enbridge Cumulative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Cumulative Red has no effect on the direction of Enbridge F i.e., Enbridge F and Enbridge Cumulative go up and down completely randomly.

Pair Corralation between Enbridge F and Enbridge Cumulative

Assuming the 90 days trading horizon Enbridge F is expected to generate 1.03 times less return on investment than Enbridge Cumulative. In addition to that, Enbridge F is 1.09 times more volatile than Enbridge Cumulative Red. It trades about 0.26 of its total potential returns per unit of risk. Enbridge Cumulative Red is currently generating about 0.3 per unit of volatility. If you would invest  1,748  in Enbridge Cumulative Red on October 23, 2024 and sell it today you would earn a total of  167.00  from holding Enbridge Cumulative Red or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Enbridge F Cum  vs.  Enbridge Cumulative Red

Enbridge F Cum

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge F Cum are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Enbridge F may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enbridge Cumulative Red

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Cumulative Red are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Enbridge Cumulative may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Enbridge F and Enbridge Cumulative

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

The idea behind Enbridge F Cum and Enbridge Cumulative Red 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.