Correlation Between Enbridge Pref and Exxon
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By analyzing existing cross correlation between Enbridge Pref 11 and EXXON MOBIL CDR, you can compare the effects of market volatilities on Enbridge Pref and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Exxon.
Diversification Opportunities for Enbridge Pref and Exxon
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enbridge and Exxon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 11 are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Exxon go up and down completely randomly.
Pair Corralation between Enbridge Pref and Exxon
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 1.52 times less return on investment than Exxon. But when comparing it to its historical volatility, Enbridge Pref 11 is 4.44 times less risky than Exxon. It trades about 0.08 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,969 in EXXON MOBIL CDR on August 31, 2024 and sell it today you would earn a total of 244.00 from holding EXXON MOBIL CDR or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.47% |
| Values | Daily Returns |
Enbridge Pref 11 vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Enbridge Pref 11 |
| EXXON MOBIL CDR |
Enbridge Pref and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and Exxon
The main advantage of trading using opposite Enbridge Pref and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.The idea behind Enbridge Pref 11 and EXXON MOBIL CDR 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.| Exxon vs. Forum Energy Metals | Exxon vs. iShares Canadian HYBrid | Exxon vs. Brompton European Dividend | Exxon vs. Solar Alliance Energy |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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