Correlation Between Enbridge and Teekay

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

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

Diversification Opportunities for Enbridge and Teekay

0.25

Correlation Coefficient

Enbridge  Teekay

Modest diversification

The 3 months correlation between Enbridge and Teekay is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Enbridge i.e., Enbridge and Teekay go up and down completely randomly.

Pair Corralation between Enbridge and Teekay

Considering the 90-day investment horizon Enbridge is expected to generate 0.52 times more return on investment than Teekay. However, Enbridge is 1.91 times less risky than Teekay. It trades about 0.1 of its potential returns per unit of risk. Teekay is currently generating about 0.0 per unit of risk. If you would invest  4,150  in Enbridge on December 28, 2024 and sell it today you would earn a total of  296.00  from holding Enbridge or generate 7.13% return on investment over 90 days.

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

Enbridge  vs.  Teekay

Enbridge

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Teekay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teekay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teekay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Enbridge and Teekay

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

The idea behind Enbridge and Teekay 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.