Correlation Between HR Real and Enbridge

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

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

Diversification Opportunities for HR Real and Enbridge

-0.73

Correlation Coefficient

HR Real  Enbridge

Pay attention - limited upside

The 3 months correlation between HR-UN and Enbridge is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding HR Real Estate and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and HR Real 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 HR Real Estate 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 HR Real i.e., HR Real and Enbridge go up and down completely randomly.

Pair Corralation between HR Real and Enbridge

Assuming the 90 days trading horizon HR Real Estate is expected to under-perform the Enbridge. In addition to that, HR Real is 1.51 times more volatile than Enbridge. It trades about -0.07 of its total potential returns per unit of risk. Enbridge is currently generating about 0.27 per unit of volatility. If you would invest  5,366  in Enbridge on September 3, 2024 and sell it today you would earn a total of  691.00  from holding Enbridge or generate 12.88% return on investment over 90 days.

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

HR Real Estate  vs.  Enbridge

HR Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enbridge

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Enbridge may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HR Real and Enbridge

The main advantage of trading using opposite HR Real and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HR Real 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 HR Real Estate 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.