Correlation Between Enbridge Pref and Eco Atlantic

Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and Eco Atlantic 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 Eco Atlantic 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 Eco Atlantic Oil, you can compare the effects of market volatilities on Enbridge Pref and Eco Atlantic 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 Eco Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Eco Atlantic.

Diversification Opportunities for Enbridge Pref and Eco Atlantic

0.47

Correlation Coefficient

Enbridge Pref  Eco Atlantic

Very weak diversification

The 3 months correlation between Enbridge and Eco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Eco Atlantic Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Atlantic Oil 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 Eco Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Atlantic Oil has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Eco Atlantic go up and down completely randomly.

Pair Corralation between Enbridge Pref and Eco Atlantic

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 0.13 times more return on investment than Eco Atlantic. However, Enbridge Pref 11 is 7.42 times less risky than Eco Atlantic. It trades about -0.09 of its potential returns per unit of risk. Eco Atlantic Oil is currently generating about -0.16 per unit of risk. If you would invest  1,980  in Enbridge Pref 11 on December 2, 2024 and sell it today you would lose (15.00) from holding Enbridge Pref 11 or give up 0.76% of portfolio value over 90 days.

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

Enbridge Pref 11  vs.  Eco Atlantic Oil

Enbridge Pref 11

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Enbridge Pref is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Eco Atlantic Oil

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Atlantic Oil are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Eco Atlantic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enbridge Pref and Eco Atlantic

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

The idea behind Enbridge Pref 11 and Eco Atlantic Oil 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 Stocks Directory module to find actively traded stocks across global markets.