Correlation Between Profound Medical and Enbridge Pref

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

By analyzing existing cross correlation between Profound Medical Corp and Enbridge Pref 15, you can compare the effects of market volatilities on Profound Medical 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 Profound Medical with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profound Medical and Enbridge Pref.

Diversification Opportunities for Profound Medical and Enbridge Pref

-0.3

Correlation Coefficient

Profound Medical  Enbridge Pref

Very good diversification

The 3 months correlation between Profound and Enbridge is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and Enbridge Pref 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 15 and Profound Medical 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 Profound Medical Corp 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 15 has no effect on the direction of Profound Medical i.e., Profound Medical and Enbridge Pref go up and down completely randomly.

Pair Corralation between Profound Medical and Enbridge Pref

Assuming the 90 days trading horizon Profound Medical Corp is expected to under-perform the Enbridge Pref. In addition to that, Profound Medical is 5.27 times more volatile than Enbridge Pref 15. It trades about -0.04 of its total potential returns per unit of risk. Enbridge Pref 15 is currently generating about 0.19 per unit of volatility. If you would invest  1,785  in Enbridge Pref 15 on October 2, 2024 and sell it today you would earn a total of  112.00  from holding Enbridge Pref 15 or generate 6.27% return on investment over 90 days.

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

Profound Medical Corp  vs.  Enbridge Pref 15

Profound Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Enbridge Pref 15

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 15 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Profound Medical and Enbridge Pref

The main advantage of trading using opposite Profound Medical and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical 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 Profound Medical Corp and Enbridge Pref 15 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.