Correlation Between Enbridge Pref and Canadian General

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

By analyzing existing cross correlation between Enbridge Pref 13 and Canadian General Investments, you can compare the effects of market volatilities on Enbridge Pref and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Canadian General.

Diversification Opportunities for Enbridge Pref and Canadian General

0.34

Correlation Coefficient

Enbridge Pref  Canadian General

Weak diversification

The 3 months correlation between Enbridge and Canadian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 13 and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 13 are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Canadian General go up and down completely randomly.

Pair Corralation between Enbridge Pref and Canadian General

Assuming the 90 days trading horizon Enbridge Pref 13 is expected to generate 0.89 times more return on investment than Canadian General. However, Enbridge Pref 13 is 1.12 times less risky than Canadian General. It trades about 0.07 of its potential returns per unit of risk. Canadian General Investments is currently generating about 0.06 per unit of risk. If you would invest  1,455  in Enbridge Pref 13 on October 4, 2024 and sell it today you would earn a total of  467.00  from holding Enbridge Pref 13 or generate 32.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.15%
Values	Daily Returns

Enbridge Pref 13  vs.  Canadian General Investments

Enbridge Pref 13

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 13 are ranked lower than 11 (%) 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.

Canadian General Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Canadian General is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enbridge Pref and Canadian General

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

The idea behind Enbridge Pref 13 and Canadian General Investments 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.