Correlation Between Enbridge Pref and Quorum Information

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

By analyzing existing cross correlation between Enbridge Pref 7 and Quorum Information Technologies, you can compare the effects of market volatilities on Enbridge Pref and Quorum Information 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 Quorum Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Quorum Information.

Diversification Opportunities for Enbridge Pref and Quorum Information

0.02

Correlation Coefficient

Enbridge Pref  Quorum Information

Significant diversification

The 3 months correlation between Enbridge and Quorum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 7 and Quorum Information Technologie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quorum Information 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 7 are associated (or correlated) with Quorum Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quorum Information has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Quorum Information go up and down completely randomly.

Pair Corralation between Enbridge Pref and Quorum Information

Assuming the 90 days trading horizon Enbridge Pref 7 is expected to under-perform the Quorum Information. But the preferred stock apears to be less risky and, when comparing its historical volatility, Enbridge Pref 7 is 5.58 times less risky than Quorum Information. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Quorum Information Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Quorum Information Technologies on September 28, 2024 and sell it today you would earn a total of  9.00  from holding Quorum Information Technologies or generate 10.59% return on investment over 90 days.

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

Enbridge Pref 7  vs.  Quorum Information Technologie

Enbridge Pref 7

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Enbridge Pref 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Enbridge Pref is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Quorum Information

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Quorum Information Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Quorum Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enbridge Pref and Quorum Information

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

The idea behind Enbridge Pref 7 and Quorum Information Technologies 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 Commodity Directory module to find actively traded commodities issued by global exchanges.