Correlation Between Enbridge Pref and Rogers Communications

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

Diversification Opportunities for Enbridge Pref and Rogers Communications

0.09

Correlation Coefficient

Enbridge Pref  Rogers Communications

Significant diversification

The 3 months correlation between Enbridge and Rogers is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 13 and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers Communications 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Rogers Communications go up and down completely randomly.

Pair Corralation between Enbridge Pref and Rogers Communications

Assuming the 90 days trading horizon Enbridge Pref 13 is expected to generate 0.2 times more return on investment than Rogers Communications. However, Enbridge Pref 13 is 5.09 times less risky than Rogers Communications. It trades about 0.0 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.08 per unit of risk. If you would invest  1,886  in Enbridge Pref 13 on December 25, 2024 and sell it today you would lose (1.00) from holding Enbridge Pref 13 or give up 0.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Enbridge Pref 13  vs.  Rogers Communications

Enbridge Pref 13

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enbridge Pref 13 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rogers Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Enbridge Pref and Rogers Communications

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

The idea behind Enbridge Pref 13 and Rogers Communications 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.