# Correlation Between Enbridge Pref and Enbridge Pref

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Can any of the company-specific risk be diversified away by investing in both Enbridge Pref 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 Enbridge Pref and Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref 11 and Enbridge Pref L, you can compare the effects of market volatilities on Enbridge Pref 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 Enbridge Pref with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Enbridge Pref.

## Diversification Opportunities for Enbridge Pref and Enbridge Pref

 0.84 Correlation Coefficient

### Very poor diversification

The 3 months correlation between Enbridge and Enbridge is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Enbridge Pref L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref L and Enbridge Pref 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 Enbridge Pref 11 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 L has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Enbridge Pref go up and down completely randomly.

## Pair Corralation between Enbridge Pref and Enbridge Pref

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 1.32 times more return on investment than Enbridge Pref. However, Enbridge Pref is 1.32 times more volatile than Enbridge Pref L. It trades about -0.01 of its potential returns per unit of risk. Enbridge Pref L is currently generating about -0.07 per unit of risk. If you would invest  1,797  in Enbridge Pref 11 on May 16, 2024 and sell it today you would lose (6.00) from holding Enbridge Pref 11 or give up 0.33% of portfolio value over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Strong Accuracy 100.0% Values Daily Returns

## Enbridge Pref 11  vs.  Enbridge Pref L

 Performance
 Timeline
 Enbridge Pref 11 Correlation Profile

### 2 of 100

 Weak Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Enbridge Pref is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
 Performance Backtest Predict
 Enbridge Pref L Correlation Profile

### 0 of 100

 Weak Strong
Very Weak
Over the last 90 days Enbridge Pref L has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
 Performance Backtest Predict

## Enbridge Pref and Enbridge Pref Volatility Contrast

 Predicted Return Density
 Returns

## Pair Trading with Enbridge Pref and Enbridge Pref

The main advantage of trading using opposite Enbridge Pref and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref 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.
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The idea behind Enbridge Pref 11 and Enbridge Pref L 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.
 Enbridge Pref vs. Enbridge Pref 11 Enbridge Pref vs. E Split Corp Enbridge Pref vs. E Split Corp Enbridge Pref vs. Sage Potash Corp