Correlation Between Enbridge Pref and Energy Fuels

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

By analyzing existing cross correlation between Enbridge Pref L and Energy Fuels, you can compare the effects of market volatilities on Enbridge Pref and Energy Fuels 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 Energy Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Energy Fuels.

Diversification Opportunities for Enbridge Pref and Energy Fuels

0.66

Correlation Coefficient

Enbridge Pref  Energy Fuels

Poor diversification

The 3 months correlation between Enbridge and Energy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref L and Energy Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fuels 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 L are associated (or correlated) with Energy Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fuels has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Energy Fuels go up and down completely randomly.

Pair Corralation between Enbridge Pref and Energy Fuels

Assuming the 90 days trading horizon Enbridge Pref is expected to generate 13.58 times less return on investment than Energy Fuels. But when comparing it to its historical volatility, Enbridge Pref L is 5.97 times less risky than Energy Fuels. It trades about 0.1 of its potential returns per unit of risk. Energy Fuels is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  586.00  in Energy Fuels on September 5, 2024 and sell it today you would earn a total of  394.00  from holding Energy Fuels or generate 67.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Enbridge Pref L  vs.  Energy Fuels

Enbridge Pref L

Risk-Adjusted Performance

7 of 100

OK

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

Energy Fuels

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Fuels are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Energy Fuels displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enbridge Pref and Energy Fuels

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

The idea behind Enbridge Pref L and Energy Fuels 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..