Correlation Between Enbridge and D2L

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Can any of the company-specific risk be diversified away by investing in both Enbridge and D2L 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 and D2L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge and D2L Inc, you can compare the effects of market volatilities on Enbridge and D2L 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 with a short position of D2L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge and D2L.

Diversification Opportunities for Enbridge and D2L

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Enbridge and D2L is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge and D2L Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on D2L Inc and Enbridge 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 are associated (or correlated) with D2L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of D2L Inc has no effect on the direction of Enbridge i.e., Enbridge and D2L go up and down completely randomly.

Pair Corralation between Enbridge and D2L

Assuming the 90 days trading horizon Enbridge is expected to generate 0.4 times more return on investment than D2L. However, Enbridge is 2.47 times less risky than D2L. It trades about 0.48 of its potential returns per unit of risk. D2L Inc is currently generating about -0.09 per unit of risk. If you would invest  6,007  in Enbridge on October 24, 2024 and sell it today you would earn a total of  494.00  from holding Enbridge or generate 8.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Enbridge  vs.  D2L Inc

 Performance 
       Timeline  
Enbridge 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Enbridge displayed solid returns over the last few months and may actually be approaching a breakup point.
D2L Inc 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in D2L Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, D2L displayed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge and D2L Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enbridge and D2L

The main advantage of trading using opposite Enbridge and D2L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge position performs unexpectedly, D2L 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 D2L will offset losses from the drop in D2L's long position.
The idea behind Enbridge and D2L Inc 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.

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