Correlation Between ECN Capital and Enbridge Pref

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

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

Diversification Opportunities for ECN Capital and Enbridge Pref

-0.57

Correlation Coefficient

ECN Capital  Enbridge Pref

Excellent diversification

The 3 months correlation between ECN and Enbridge is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ECN Capital Corp 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 ECN Capital 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 ECN Capital 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 L has no effect on the direction of ECN Capital i.e., ECN Capital and Enbridge Pref go up and down completely randomly.

Pair Corralation between ECN Capital and Enbridge Pref

Assuming the 90 days trading horizon ECN Capital Corp is expected to under-perform the Enbridge Pref. In addition to that, ECN Capital is 3.12 times more volatile than Enbridge Pref L. It trades about -0.13 of its total potential returns per unit of risk. Enbridge Pref L is currently generating about 0.0 per unit of volatility. If you would invest  2,069  in Enbridge Pref L on February 3, 2024 and sell it today you would lose (1.00) from holding Enbridge Pref L or give up 0.05% of portfolio value over 90 days.

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

ECN Capital Corp  vs.  Enbridge Pref L

ECN Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECN Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Enbridge Pref L

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with ECN Capital and Enbridge Pref

The main advantage of trading using opposite ECN Capital and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECN Capital 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 ECN Capital Corp 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.