Correlation Between Enbridge Pref and New Pacific

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Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and New Pacific 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 New Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref L and New Pacific Metals, you can compare the effects of market volatilities on Enbridge Pref and New Pacific 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 New Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and New Pacific.

Diversification Opportunities for Enbridge Pref and New Pacific

EnbridgeNewDiversified AwayEnbridgeNewDiversified Away100%
-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Enbridge and New is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref L and New Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Pacific Metals 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 L are associated (or correlated) with New Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Pacific Metals has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and New Pacific go up and down completely randomly.

Pair Corralation between Enbridge Pref and New Pacific

Assuming the 90 days trading horizon Enbridge Pref L is expected to generate 0.17 times more return on investment than New Pacific. However, Enbridge Pref L is 5.87 times less risky than New Pacific. It trades about 0.13 of its potential returns per unit of risk. New Pacific Metals is currently generating about -0.18 per unit of risk. If you would invest  2,174  in Enbridge Pref L on October 27, 2024 and sell it today you would earn a total of  103.00  from holding Enbridge Pref L or generate 4.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Enbridge Pref L  vs.  New Pacific Metals

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -30-20-10010
JavaScript chart by amCharts 3.21.15ENB-PFU NUAG
       Timeline  
Enbridge Pref L 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref L are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan21.421.621.82222.222.422.622.823
New Pacific Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days New Pacific Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1.822.22.42.62.8

Enbridge Pref and New Pacific Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.77-1.31-0.85-0.390.0078540.430.891.351.812.27 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15ENB-PFU NUAG
       Returns  

Pair Trading with Enbridge Pref and New Pacific

The main advantage of trading using opposite Enbridge Pref and New Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, New Pacific 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 New Pacific will offset losses from the drop in New Pacific's long position.
The idea behind Enbridge Pref L and New Pacific Metals 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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