Correlation Between Dream Industrial and Enbridge Pref

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Can any of the company-specific risk be diversified away by investing in both Dream Industrial and Enbridge Pref 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 Dream Industrial and Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and Enbridge Pref 13, you can compare the effects of market volatilities on Dream Industrial and Enbridge Pref 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 Dream Industrial with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Enbridge Pref.

Diversification Opportunities for Dream Industrial and Enbridge Pref

-0.87
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dream and Enbridge is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real and Enbridge Pref 13 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 13 and Dream Industrial 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 Dream Industrial Real are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 13 has no effect on the direction of Dream Industrial i.e., Dream Industrial and Enbridge Pref go up and down completely randomly.

Pair Corralation between Dream Industrial and Enbridge Pref

Assuming the 90 days trading horizon Dream Industrial Real is expected to under-perform the Enbridge Pref. In addition to that, Dream Industrial is 2.06 times more volatile than Enbridge Pref 13. It trades about -0.17 of its total potential returns per unit of risk. Enbridge Pref 13 is currently generating about 0.31 per unit of volatility. If you would invest  1,909  in Enbridge Pref 13 on October 15, 2024 and sell it today you would earn a total of  62.00  from holding Enbridge Pref 13 or generate 3.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy94.44%
ValuesDaily Returns

Dream Industrial Real  vs.  Enbridge Pref 13

 Performance 
       Timeline  
Dream Industrial Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dream Industrial Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Enbridge Pref 13 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 13 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dream Industrial and Enbridge Pref Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dream Industrial and Enbridge Pref

The main advantage of trading using opposite Dream Industrial and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial position performs unexpectedly, Enbridge Pref 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 Pref will offset losses from the drop in Enbridge Pref's long position.
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The idea behind Dream Industrial Real and Enbridge Pref 13 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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