Correlation Between Enbridge Pref and ARC Resources

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and ARC Resources 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 Enbridge Pref and ARC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref L and ARC Resources, you can compare the effects of market volatilities on Enbridge Pref and ARC Resources 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 ARC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and ARC Resources.

Diversification Opportunities for Enbridge Pref and ARC Resources

EnbridgeARCDiversified AwayEnbridgeARCDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Enbridge and ARC is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref L and ARC Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARC Resources 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 L are associated (or correlated) with ARC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARC Resources has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and ARC Resources go up and down completely randomly.

Pair Corralation between Enbridge Pref and ARC Resources

Assuming the 90 days trading horizon Enbridge Pref is expected to generate 6.12 times less return on investment than ARC Resources. But when comparing it to its historical volatility, Enbridge Pref L is 3.73 times less risky than ARC Resources. It trades about 0.05 of its potential returns per unit of risk. ARC Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,648  in ARC Resources on November 25, 2024 and sell it today you would earn a total of  75.00  from holding ARC Resources or generate 2.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Enbridge Pref L  vs.  ARC Resources

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505
JavaScript chart by amCharts 3.21.15ENB-PFU ARX
       Timeline  
Enbridge Pref L 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref L are ranked lower than 8 (%) 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 latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb21.82222.222.422.622.8
ARC Resources 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ARC Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ARC Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2424.52525.52626.52727.528

Enbridge Pref and ARC Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.65-1.21-0.77-0.330.02930.430.871.311.75 0.20.40.60.81.01.21.4
JavaScript chart by amCharts 3.21.15ENB-PFU ARX
       Returns  

Pair Trading with Enbridge Pref and ARC Resources

The main advantage of trading using opposite Enbridge Pref and ARC Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, ARC Resources 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 ARC Resources will offset losses from the drop in ARC Resources' long position.
The idea behind Enbridge Pref L and ARC Resources 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.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

Other Complementary Tools

Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets