Correlation Between Safe Bulkers and Enbridge

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

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

Diversification Opportunities for Safe Bulkers and Enbridge

-0.58

Correlation Coefficient

Safe Bulkers  Enbridge

Excellent diversification

The 3 months correlation between Safe and Enbridge is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Enbridge go up and down completely randomly.

Pair Corralation between Safe Bulkers and Enbridge

Allowing for the 90-day total investment horizon Safe Bulkers is expected to under-perform the Enbridge. In addition to that, Safe Bulkers is 2.15 times more volatile than Enbridge. It trades about -0.28 of its total potential returns per unit of risk. Enbridge is currently generating about 0.06 per unit of volatility. If you would invest  4,024  in Enbridge on September 24, 2024 and sell it today you would earn a total of  131.00  from holding Enbridge or generate 3.26% return on investment over 90 days.

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

Safe Bulkers  vs.  Enbridge

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Enbridge

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Enbridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Safe Bulkers and Enbridge

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

The idea behind Safe Bulkers and Enbridge 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.