Correlation Between Element Fleet and Enbridge Pref

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Can any of the company-specific risk be diversified away by investing in both Element Fleet 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 Element Fleet and Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Fleet Management and Enbridge Pref 15, you can compare the effects of market volatilities on Element Fleet 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 Element Fleet with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Enbridge Pref.

Diversification Opportunities for Element Fleet and Enbridge Pref

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Element and Enbridge is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Enbridge Pref 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 15 and Element Fleet 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 Element Fleet Management 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 15 has no effect on the direction of Element Fleet i.e., Element Fleet and Enbridge Pref go up and down completely randomly.

Pair Corralation between Element Fleet and Enbridge Pref

Assuming the 90 days trading horizon Element Fleet Management is expected to under-perform the Enbridge Pref. In addition to that, Element Fleet is 3.36 times more volatile than Enbridge Pref 15. It trades about -0.07 of its total potential returns per unit of risk. Enbridge Pref 15 is currently generating about 0.18 per unit of volatility. If you would invest  1,931  in Enbridge Pref 15 on November 5, 2024 and sell it today you would earn a total of  24.00  from holding Enbridge Pref 15 or generate 1.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Element Fleet Management  vs.  Enbridge Pref 15

 Performance 
       Timeline  
Element Fleet Management 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Element Fleet Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Enbridge Pref 15 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 15 are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Element Fleet and Enbridge Pref Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Element Fleet and Enbridge Pref

The main advantage of trading using opposite Element Fleet and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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 Element Fleet Management and Enbridge Pref 15 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 CEOs Directory module to screen CEOs from public companies around the world.

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