Correlation Between Enbridge Pref and Prairie Provident
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By analyzing existing cross correlation between Enbridge Pref L and Prairie Provident Resources, you can compare the effects of market volatilities on Enbridge Pref and Prairie Provident 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 Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Prairie Provident.
Diversification Opportunities for Enbridge Pref and Prairie Provident
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enbridge and Prairie is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref L and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident 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 Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Prairie Provident go up and down completely randomly.
Pair Corralation between Enbridge Pref and Prairie Provident
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 2.26 times less return on investment than Prairie Provident. But when comparing it to its historical volatility, Enbridge Pref L is 10.66 times less risky than Prairie Provident. It trades about 0.07 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Prairie Provident Resources on October 9, 2024 and sell it today you would lose (10.50) from holding Prairie Provident Resources or give up 65.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Enbridge Pref L vs. Prairie Provident Resources
Performance |
| Timeline |
| Enbridge Pref L |
| Prairie Provident |
Enbridge Pref and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and Prairie Provident
The main advantage of trading using opposite Enbridge Pref and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| Enbridge Pref vs. Maple Peak Investments | Enbridge Pref vs. Atrium Mortgage Investment | Enbridge Pref vs. XXIX Metal Corp | Enbridge Pref vs. Richelieu Hardware |
| Prairie Provident vs. Pine Cliff Energy | Prairie Provident vs. InPlay Oil Corp | Prairie Provident vs. Journey Energy |
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