Correlation Between Enbridge Pref and Sage Potash

Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and Sage Potash 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 Sage Potash 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 Sage Potash Corp, you can compare the effects of market volatilities on Enbridge Pref and Sage Potash 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 Sage Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Sage Potash.

Diversification Opportunities for Enbridge Pref and Sage Potash

-0.48

Correlation Coefficient

Enbridge Pref  Sage Potash

Very good diversification

The 3 months correlation between Enbridge and Sage is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Sage Potash Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sage Potash Corp 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 Sage Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sage Potash Corp has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Sage Potash go up and down completely randomly.

Pair Corralation between Enbridge Pref and Sage Potash

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 0.07 times more return on investment than Sage Potash. However, Enbridge Pref 11 is 15.11 times less risky than Sage Potash. It trades about 0.27 of its potential returns per unit of risk. Sage Potash Corp is currently generating about 0.01 per unit of risk. If you would invest  1,826  in Enbridge Pref 11 on August 31, 2024 and sell it today you would earn a total of  62.00  from holding Enbridge Pref 11 or generate 3.4% return on investment over 90 days.

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

Enbridge Pref 11  vs.  Sage Potash Corp

Enbridge Pref 11

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 7 (%) 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.

Sage Potash Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sage Potash Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Sage Potash may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Enbridge Pref and Sage Potash

The main advantage of trading using opposite Enbridge Pref and Sage Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Sage Potash 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 Sage Potash will offset losses from the drop in Sage Potash's long position.

The idea behind Enbridge Pref 11 and Sage Potash Corp 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..