Correlation Between Blue Moon and Enbridge Pref

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

By analyzing existing cross correlation between Blue Moon Zinc and Enbridge Pref 7, you can compare the effects of market volatilities on Blue Moon and Enbridge Pref 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 Blue Moon with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Enbridge Pref.

Diversification Opportunities for Blue Moon and Enbridge Pref

-0.46

Correlation Coefficient

Blue Moon  Enbridge Pref

Very good diversification

The 3 months correlation between Blue and Enbridge is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Zinc and Enbridge Pref 7 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 7 and Blue Moon 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 Blue Moon Zinc are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 7 has no effect on the direction of Blue Moon i.e., Blue Moon and Enbridge Pref go up and down completely randomly.

Pair Corralation between Blue Moon and Enbridge Pref

If you would invest  1,958  in Enbridge Pref 7 on September 30, 2024 and sell it today you would earn a total of  67.00  from holding Enbridge Pref 7 or generate 3.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Blue Moon Zinc  vs.  Enbridge Pref 7

Blue Moon Zinc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Zinc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blue Moon showed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Pref 7

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enbridge Pref 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Enbridge Pref is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Moon and Enbridge Pref

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

The idea behind Blue Moon Zinc and Enbridge Pref 7 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.