Correlation Between Enbridge Pref and Anfield Resources

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

By analyzing existing cross correlation between Enbridge Pref 11 and Anfield Resources, you can compare the effects of market volatilities on Enbridge Pref and Anfield Resources 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 Pref with a short position of Anfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Anfield Resources.

Diversification Opportunities for Enbridge Pref and Anfield Resources

-0.59

Correlation Coefficient

Enbridge Pref  Anfield Resources

Excellent diversification

The 3 months correlation between Enbridge and Anfield is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Enbridge Pref 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 Pref 11 are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Anfield Resources go up and down completely randomly.

Pair Corralation between Enbridge Pref and Anfield Resources

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 0.09 times more return on investment than Anfield Resources. However, Enbridge Pref 11 is 11.54 times less risky than Anfield Resources. It trades about 0.18 of its potential returns per unit of risk. Anfield Resources is currently generating about 0.01 per unit of risk. If you would invest  1,835  in Enbridge Pref 11 on October 4, 2024 and sell it today you would earn a total of  129.00  from holding Enbridge Pref 11 or generate 7.03% return on investment over 90 days.

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

Enbridge Pref 11  vs.  Anfield Resources

Enbridge Pref 11

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anfield Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Anfield Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enbridge Pref and Anfield Resources

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

The idea behind Enbridge Pref 11 and Anfield Resources 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.