Correlation Between Uber Technologies and Enbridge

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

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

Diversification Opportunities for Uber Technologies and Enbridge

-0.47

Correlation Coefficient

Uber Technologies  Enbridge

Very good diversification

The 3 months correlation between Uber and Enbridge is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Enbridge go up and down completely randomly.

Pair Corralation between Uber Technologies and Enbridge

Assuming the 90 days trading horizon Uber Technologies is expected to generate 2.1 times more return on investment than Enbridge. However, Uber Technologies is 2.1 times more volatile than Enbridge. It trades about 0.08 of its potential returns per unit of risk. Enbridge is currently generating about 0.05 per unit of risk. If you would invest  2,642  in Uber Technologies on October 4, 2024 and sell it today you would earn a total of  3,481  from holding Uber Technologies or generate 131.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Uber Technologies  vs.  Enbridge

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Enbridge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Enbridge may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Uber Technologies and Enbridge

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