Correlation Between IA Financial and Enbridge Cumulative

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

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

Diversification Opportunities for IA Financial and Enbridge Cumulative

-0.02

Correlation Coefficient

IA Financial  Enbridge Cumulative

Good diversification

The 3 months correlation between IAG and Enbridge is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Enbridge Cumulative Red in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Cumulative Red and IA Financial 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 iA Financial are associated (or correlated) with Enbridge Cumulative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Cumulative Red has no effect on the direction of IA Financial i.e., IA Financial and Enbridge Cumulative go up and down completely randomly.

Pair Corralation between IA Financial and Enbridge Cumulative

Assuming the 90 days trading horizon IA Financial is expected to generate 1.02 times less return on investment than Enbridge Cumulative. In addition to that, IA Financial is 3.32 times more volatile than Enbridge Cumulative Red. It trades about 0.02 of its total potential returns per unit of risk. Enbridge Cumulative Red is currently generating about 0.07 per unit of volatility. If you would invest  1,829  in Enbridge Cumulative Red on December 22, 2024 and sell it today you would earn a total of  42.00  from holding Enbridge Cumulative Red or generate 2.3% return on investment over 90 days.

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

iA Financial  vs.  Enbridge Cumulative Red

iA Financial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IA Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Enbridge Cumulative Red

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Cumulative Red are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Enbridge Cumulative is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IA Financial and Enbridge Cumulative

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

The idea behind iA Financial and Enbridge Cumulative Red 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.