Correlation Between Enbridge Pref and Pine Cliff

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

By analyzing existing cross correlation between Enbridge Pref 5 and Pine Cliff Energy, you can compare the effects of market volatilities on Enbridge Pref and Pine Cliff 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 Pine Cliff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Pine Cliff.

Diversification Opportunities for Enbridge Pref and Pine Cliff

-0.4

Correlation Coefficient

Enbridge Pref  Pine Cliff

Very good diversification

The 3 months correlation between Enbridge and Pine is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and Pine Cliff Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pine Cliff Energy 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 5 are associated (or correlated) with Pine Cliff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pine Cliff Energy has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Pine Cliff go up and down completely randomly.

Pair Corralation between Enbridge Pref and Pine Cliff

Assuming the 90 days trading horizon Enbridge Pref 5 is expected to generate 0.18 times more return on investment than Pine Cliff. However, Enbridge Pref 5 is 5.68 times less risky than Pine Cliff. It trades about 0.25 of its potential returns per unit of risk. Pine Cliff Energy is currently generating about -0.01 per unit of risk. If you would invest  2,229  in Enbridge Pref 5 on September 1, 2024 and sell it today you would earn a total of  166.00  from holding Enbridge Pref 5 or generate 7.45% 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 5  vs.  Pine Cliff Energy

Enbridge Pref 5

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 5 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pine Cliff Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pine Cliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Pine Cliff is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Enbridge Pref and Pine Cliff

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

The idea behind Enbridge Pref 5 and Pine Cliff Energy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.