Correlation Between Enbridge Pref and Baselode Energy

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

Diversification Opportunities for Enbridge Pref and Baselode Energy

-0.65

Correlation Coefficient

Enbridge Pref  Baselode Energy

Excellent diversification

The 3 months correlation between Enbridge and Baselode is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Baselode Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baselode Energy Corp 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 Baselode Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baselode Energy Corp has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Baselode Energy go up and down completely randomly.

Pair Corralation between Enbridge Pref and Baselode Energy

Assuming the 90 days trading horizon Enbridge Pref is expected to generate 5.44 times less return on investment than Baselode Energy. But when comparing it to its historical volatility, Enbridge Pref 11 is 16.63 times less risky than Baselode Energy. It trades about 0.37 of its potential returns per unit of risk. Baselode Energy Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9.50  in Baselode Energy Corp on October 5, 2024 and sell it today you would earn a total of  1.50  from holding Baselode Energy Corp or generate 15.79% return on investment over 90 days.

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

Enbridge Pref 11  vs.  Baselode Energy Corp

Enbridge Pref 11

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baselode Energy 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 Baselode Energy

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

The idea behind Enbridge Pref 11 and Baselode Energy Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.