Correlation Between Enbridge Pref and Themac Resources

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

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

Diversification Opportunities for Enbridge Pref and Themac Resources

0.4

Correlation Coefficient

Enbridge Pref  Themac Resources

Very weak diversification

The 3 months correlation between Enbridge and Themac is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref Series and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac 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 Series are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Themac Resources go up and down completely randomly.

Pair Corralation between Enbridge Pref and Themac Resources

Assuming the 90 days trading horizon Enbridge Pref Series is expected to under-perform the Themac Resources. But the preferred stock apears to be less risky and, when comparing its historical volatility, Enbridge Pref Series is 18.01 times less risky than Themac Resources. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Themac Resources Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Themac Resources Group on September 22, 2024 and sell it today you would earn a total of  0.50  from holding Themac Resources Group or generate 16.67% return on investment over 90 days.

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

Enbridge Pref Series  vs.  Themac Resources Group

Enbridge Pref Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enbridge Pref Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enbridge Pref and Themac Resources

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

The idea behind Enbridge Pref Series and Themac Resources Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.