Correlation Between Accelerate Canadian and Enbridge Pref

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

By analyzing existing cross correlation between Accelerate Canadian Long and Enbridge Pref 5, you can compare the effects of market volatilities on Accelerate Canadian 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 Accelerate Canadian with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accelerate Canadian and Enbridge Pref.

Diversification Opportunities for Accelerate Canadian and Enbridge Pref

0.86

Correlation Coefficient

Accelerate Canadian  Enbridge Pref

Very poor diversification

The 3 months correlation between Accelerate and Enbridge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Accelerate Canadian Long and Enbridge Pref 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 5 and Accelerate Canadian 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 Accelerate Canadian Long 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 5 has no effect on the direction of Accelerate Canadian i.e., Accelerate Canadian and Enbridge Pref go up and down completely randomly.

Pair Corralation between Accelerate Canadian and Enbridge Pref

Assuming the 90 days trading horizon Accelerate Canadian Long is expected to generate 1.45 times more return on investment than Enbridge Pref. However, Accelerate Canadian is 1.45 times more volatile than Enbridge Pref 5. It trades about 0.26 of its potential returns per unit of risk. Enbridge Pref 5 is currently generating about 0.2 per unit of risk. If you would invest  2,454  in Accelerate Canadian Long on September 15, 2024 and sell it today you would earn a total of  267.00  from holding Accelerate Canadian Long or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Accelerate Canadian Long  vs.  Enbridge Pref 5

Accelerate Canadian Long

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Accelerate Canadian Long are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Accelerate Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Enbridge Pref 5

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 5 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Enbridge Pref is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Accelerate Canadian and Enbridge Pref

The main advantage of trading using opposite Accelerate Canadian and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accelerate Canadian 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 Accelerate Canadian Long and Enbridge Pref 5 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.