Correlation Between Enbridge and Dividend Growth

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

By analyzing existing cross correlation between Enbridge and Dividend Growth Split, you can compare the effects of market volatilities on Enbridge and Dividend Growth 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 with a short position of Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and Dividend Growth.

Diversification Opportunities for Enbridge and Dividend Growth

0.03

Correlation Coefficient

Enbridge  Dividend Growth

Significant diversification

The 3 months correlation between Enbridge and Dividend is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split and Enbridge 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 are associated (or correlated) with Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of Enbridge i.e., Enbridge and Dividend Growth go up and down completely randomly.

Pair Corralation between Enbridge and Dividend Growth

Assuming the 90 days trading horizon Enbridge is expected to generate 0.51 times more return on investment than Dividend Growth. However, Enbridge is 1.97 times less risky than Dividend Growth. It trades about 0.48 of its potential returns per unit of risk. Dividend Growth Split is currently generating about 0.01 per unit of risk. If you would invest  6,007  in Enbridge on October 24, 2024 and sell it today you would earn a total of  494.00  from holding Enbridge or generate 8.22% return on investment over 90 days.

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

Enbridge  vs.  Dividend Growth Split

Enbridge

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Enbridge displayed solid returns over the last few months and may actually be approaching a breakup point.

Dividend Growth Split

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dividend Growth Split has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dividend Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enbridge and Dividend Growth

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

The idea behind Enbridge and Dividend Growth Split 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.