Correlation Between Fidelity Sustainable and Enbridge

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

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

Diversification Opportunities for Fidelity Sustainable and Enbridge

-0.22

Correlation Coefficient

Fidelity Sustainable  Enbridge

Very good diversification

The 3 months correlation between Fidelity and Enbridge is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable USD and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Fidelity Sustainable 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 Fidelity Sustainable USD are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and Enbridge go up and down completely randomly.

Pair Corralation between Fidelity Sustainable and Enbridge

Assuming the 90 days trading horizon Fidelity Sustainable USD is expected to under-perform the Enbridge. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity Sustainable USD is 2.52 times less risky than Enbridge. The etf trades about -0.01 of its potential returns per unit of risk. The Enbridge is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  5,611  in Enbridge on October 24, 2024 and sell it today you would earn a total of  928.00  from holding Enbridge or generate 16.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.85%
Values	Daily Returns

Fidelity Sustainable USD  vs.  Enbridge

Fidelity Sustainable USD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enbridge

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enbridge unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Sustainable and Enbridge

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

The idea behind Fidelity Sustainable USD and Enbridge 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.