Correlation Between East Side and Enbridge Pref

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

Diversification Opportunities for East Side and Enbridge Pref

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between East and Enbridge is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Enbridge Pref L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref L and East Side 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 East Side Games 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 L has no effect on the direction of East Side i.e., East Side and Enbridge Pref go up and down completely randomly.

Pair Corralation between East Side and Enbridge Pref

Assuming the 90 days trading horizon East Side Games is expected to under-perform the Enbridge Pref. In addition to that, East Side is 7.7 times more volatile than Enbridge Pref L. It trades about -0.17 of its total potential returns per unit of risk. Enbridge Pref L is currently generating about 0.03 per unit of volatility. If you would invest  2,218  in Enbridge Pref L on September 23, 2024 and sell it today you would earn a total of  7.00  from holding Enbridge Pref L or generate 0.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

East Side Games  vs.  Enbridge Pref L

 Performance 
       Timeline  
East Side Games 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
Enbridge Pref L 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref L are ranked lower than 1 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

East Side and Enbridge Pref Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with East Side and Enbridge Pref

The main advantage of trading using opposite East Side and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Side 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 East Side Games and Enbridge Pref L 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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