Correlation Between Summa Silver and Enbridge Pref

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

By analyzing existing cross correlation between Summa Silver Corp and Enbridge Pref 1, you can compare the effects of market volatilities on Summa Silver 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 Summa Silver with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Enbridge Pref.

Diversification Opportunities for Summa Silver and Enbridge Pref

-0.76

Correlation Coefficient

Summa Silver  Enbridge Pref

Pay attention - limited upside

The 3 months correlation between Summa and Enbridge is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Enbridge Pref 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 1 and Summa Silver 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 Summa Silver 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 1 has no effect on the direction of Summa Silver i.e., Summa Silver and Enbridge Pref go up and down completely randomly.

Pair Corralation between Summa Silver and Enbridge Pref

Assuming the 90 days trading horizon Summa Silver Corp is expected to generate 13.0 times more return on investment than Enbridge Pref. However, Summa Silver is 13.0 times more volatile than Enbridge Pref 1. It trades about 0.12 of its potential returns per unit of risk. Enbridge Pref 1 is currently generating about 0.07 per unit of risk. If you would invest  26.00  in Summa Silver Corp on October 7, 2024 and sell it today you would earn a total of  2.00  from holding Summa Silver Corp or generate 7.69% return on investment over 90 days.

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

Summa Silver Corp  vs.  Enbridge Pref 1

Summa Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summa Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Enbridge Pref 1

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 1 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. 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 Summa Silver and Enbridge Pref

The main advantage of trading using opposite Summa Silver and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver 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 Summa Silver Corp and Enbridge Pref 1 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.