Correlation Between Xtract One and Enbridge Pref

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

By analyzing existing cross correlation between Xtract One Technologies and Enbridge Pref 11, you can compare the effects of market volatilities on Xtract One 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 Xtract One with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtract One and Enbridge Pref.

Diversification Opportunities for Xtract One and Enbridge Pref

-0.86

Correlation Coefficient

Xtract One  Enbridge Pref

Pay attention - limited upside

The 3 months correlation between Xtract and Enbridge is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xtract One Technologies and Enbridge Pref 11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 11 and Xtract One 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 Xtract One Technologies 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 11 has no effect on the direction of Xtract One i.e., Xtract One and Enbridge Pref go up and down completely randomly.

Pair Corralation between Xtract One and Enbridge Pref

Assuming the 90 days trading horizon Xtract One Technologies is expected to under-perform the Enbridge Pref. In addition to that, Xtract One is 7.37 times more volatile than Enbridge Pref 11. It trades about -0.07 of its total potential returns per unit of risk. Enbridge Pref 11 is currently generating about 0.19 per unit of volatility. If you would invest  1,858  in Enbridge Pref 11 on October 9, 2024 and sell it today you would earn a total of  143.00  from holding Enbridge Pref 11 or generate 7.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Xtract One Technologies  vs.  Enbridge Pref 11

Xtract One Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtract One Technologies 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 very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Enbridge Pref 11

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xtract One and Enbridge Pref

The main advantage of trading using opposite Xtract One and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtract One 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 Xtract One Technologies and Enbridge Pref 11 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.