Correlation Between Enbridge Pref and Definity Financial
Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and Definity Financial 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 Definity Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref 7 and Definity Financial Corp, you can compare the effects of market volatilities on Enbridge Pref and Definity Financial 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 Definity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Definity Financial.
Diversification Opportunities for Enbridge Pref and Definity Financial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Enbridge and Definity is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 7 and Definity Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definity Financial Corp 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 7 are associated (or correlated) with Definity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definity Financial Corp has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Definity Financial go up and down completely randomly.
Pair Corralation between Enbridge Pref and Definity Financial
Assuming the 90 days trading horizon Enbridge Pref is expected to generate 1.24 times less return on investment than Definity Financial. But when comparing it to its historical volatility, Enbridge Pref 7 is 2.18 times less risky than Definity Financial. It trades about 0.12 of its potential returns per unit of risk. Definity Financial Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,663 in Definity Financial Corp on October 11, 2024 and sell it today you would earn a total of 1,927 from holding Definity Financial Corp or generate 52.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enbridge Pref 7 vs. Definity Financial Corp
Performance |
| Timeline |
| Enbridge Pref 7 |
| Definity Financial Corp |
Enbridge Pref and Definity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enbridge Pref and Definity Financial
The main advantage of trading using opposite Enbridge Pref and Definity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Definity Financial 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 Definity Financial will offset losses from the drop in Definity Financial's long position.| Enbridge Pref vs. Canadian Utilities Limited | Enbridge Pref vs. TUT Fitness Group | Enbridge Pref vs. VIP Entertainment Technologies | Enbridge Pref vs. DRI Healthcare Trust |
| Definity Financial vs. Trisura Group | Definity Financial vs. Pet Valu Holdings | Definity Financial vs. Intact Financial | Definity Financial vs. Topaz Energy Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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