Correlation Between Enbridge Pref and Trican Well

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

Diversification Opportunities for Enbridge Pref and Trican Well

0.28

Correlation Coefficient

Enbridge Pref  Trican Well

Modest diversification

The 3 months correlation between Enbridge and Trican is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref L and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Trican Well go up and down completely randomly.

Pair Corralation between Enbridge Pref and Trican Well

Assuming the 90 days trading horizon Enbridge Pref L is expected to generate 0.41 times more return on investment than Trican Well. However, Enbridge Pref L is 2.42 times less risky than Trican Well. It trades about 0.11 of its potential returns per unit of risk. Trican Well Service is currently generating about 0.02 per unit of risk. If you would invest  1,680  in Enbridge Pref L on October 4, 2024 and sell it today you would earn a total of  580.00  from holding Enbridge Pref L or generate 34.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

Enbridge Pref L  vs.  Trican Well Service

Enbridge Pref L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enbridge Pref L has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Trican Well Service

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trican Well Service are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Trican Well may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Enbridge Pref and Trican Well

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

The idea behind Enbridge Pref L and Trican Well Service 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.