Correlation Between Pulse Oil and Enbridge Pref

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

By analyzing existing cross correlation between Pulse Oil Corp and Enbridge Pref 5, you can compare the effects of market volatilities on Pulse Oil 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 Pulse Oil with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pulse Oil and Enbridge Pref.

Diversification Opportunities for Pulse Oil and Enbridge Pref

-0.75

Correlation Coefficient

Pulse Oil  Enbridge Pref

Pay attention - limited upside

The 3 months correlation between Pulse and Enbridge is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pulse Oil Corp and Enbridge Pref 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 5 and Pulse Oil 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 Pulse Oil 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 5 has no effect on the direction of Pulse Oil i.e., Pulse Oil and Enbridge Pref go up and down completely randomly.

Pair Corralation between Pulse Oil and Enbridge Pref

Assuming the 90 days horizon Pulse Oil Corp is expected to generate 70.42 times more return on investment than Enbridge Pref. However, Pulse Oil is 70.42 times more volatile than Enbridge Pref 5. It trades about 0.02 of its potential returns per unit of risk. Enbridge Pref 5 is currently generating about -0.04 per unit of risk. If you would invest  2.00  in Pulse Oil Corp on September 25, 2024 and sell it today you would lose (0.50) from holding Pulse Oil Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Pulse Oil Corp  vs.  Enbridge Pref 5

Pulse Oil Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pulse Oil Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pulse Oil showed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Pref 5

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 5 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pulse Oil and Enbridge Pref

The main advantage of trading using opposite Pulse Oil and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pulse Oil 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 Pulse Oil Corp and Enbridge Pref 5 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.