Correlation Between Enbridge Pref and Accelerate Canadian

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

By analyzing existing cross correlation between Enbridge Pref 5 and Accelerate Canadian Long, you can compare the effects of market volatilities on Enbridge Pref and Accelerate Canadian 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 Accelerate Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Accelerate Canadian.

Diversification Opportunities for Enbridge Pref and Accelerate Canadian

0.86

Correlation Coefficient

Enbridge Pref  Accelerate Canadian

Very poor diversification

The 3 months correlation between Enbridge and Accelerate is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and Accelerate Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Canadian Long 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 5 are associated (or correlated) with Accelerate Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Canadian Long has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Accelerate Canadian go up and down completely randomly.

Pair Corralation between Enbridge Pref and Accelerate Canadian

Assuming the 90 days trading horizon Enbridge Pref is expected to generate 1.88 times less return on investment than Accelerate Canadian. But when comparing it to its historical volatility, Enbridge Pref 5 is 1.45 times less risky than Accelerate Canadian. It trades about 0.2 of its potential returns per unit of risk. Accelerate Canadian Long is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,454  in Accelerate Canadian Long on September 15, 2024 and sell it today you would earn a total of  267.00  from holding Accelerate Canadian Long or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Enbridge Pref 5  vs.  Accelerate Canadian Long

Enbridge Pref 5

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 5 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Accelerate Canadian Long

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Accelerate Canadian Long are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Accelerate Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Enbridge Pref and Accelerate Canadian

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

The idea behind Enbridge Pref 5 and Accelerate Canadian Long 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.