Correlation Between Income Financial and Enbridge F

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

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

Diversification Opportunities for Income Financial and Enbridge F

0.31

Correlation Coefficient

Income Financial  Enbridge F

Weak diversification

The 3 months correlation between Income and Enbridge is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Income Financial Trust and Enbridge F Cum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge F Cum and Income 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 Income Financial Trust are associated (or correlated) with Enbridge F. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge F Cum has no effect on the direction of Income Financial i.e., Income Financial and Enbridge F go up and down completely randomly.

Pair Corralation between Income Financial and Enbridge F

Assuming the 90 days trading horizon Income Financial is expected to generate 1.14 times less return on investment than Enbridge F. In addition to that, Income Financial is 2.21 times more volatile than Enbridge F Cum. It trades about 0.12 of its total potential returns per unit of risk. Enbridge F Cum is currently generating about 0.29 per unit of volatility. If you would invest  1,816  in Enbridge F Cum on October 26, 2024 and sell it today you would earn a total of  185.00  from holding Enbridge F Cum or generate 10.19% return on investment over 90 days.

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

Income Financial Trust  vs.  Enbridge F Cum

Income Financial Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Income Financial Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Income Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Enbridge F Cum

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge F Cum are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Enbridge F may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Income Financial and Enbridge F

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

The idea behind Income Financial Trust and Enbridge F Cum 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.