Correlation Between D Wave and Enbridge

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

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

Diversification Opportunities for D Wave and Enbridge

0.66

Correlation Coefficient

D Wave  Enbridge

Poor diversification

The 3 months correlation between QBTS and Enbridge is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding D Wave Quantum and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and D Wave 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 D Wave Quantum are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of D Wave i.e., D Wave and Enbridge go up and down completely randomly.

Pair Corralation between D Wave and Enbridge

Given the investment horizon of 90 days D Wave Quantum is expected to generate 4.58 times more return on investment than Enbridge. However, D Wave is 4.58 times more volatile than Enbridge. It trades about 0.09 of its potential returns per unit of risk. Enbridge is currently generating about 0.04 per unit of risk. If you would invest  105.00  in D Wave Quantum on September 28, 2024 and sell it today you would earn a total of  870.00  from holding D Wave Quantum or generate 828.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

D Wave Quantum  vs.  Enbridge

D Wave Quantum

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in D Wave Quantum are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, D Wave unveiled solid returns over the last few months and may actually be approaching a breakup point.

Enbridge

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Enbridge is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with D Wave and Enbridge

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

The idea behind D Wave Quantum and Enbridge 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.