Correlation Between GM and Enbridge Pref
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By analyzing existing cross correlation between General Motors and Enbridge Pref 11, you can compare the effects of market volatilities on GM and Enbridge Pref 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 GM with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Enbridge Pref.
Diversification Opportunities for GM and Enbridge Pref
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Enbridge is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Enbridge Pref 11 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 11 and GM 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 General Motors are associated (or correlated) with Enbridge Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge Pref 11 has no effect on the direction of GM i.e., GM and Enbridge Pref go up and down completely randomly.
Pair Corralation between GM and Enbridge Pref
Allowing for the 90-day total investment horizon General Motors is expected to generate 5.02 times more return on investment than Enbridge Pref. However, GM is 5.02 times more volatile than Enbridge Pref 11. It trades about 0.12 of its potential returns per unit of risk. Enbridge Pref 11 is currently generating about 0.27 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Enbridge Pref 11
Performance |
| Timeline |
| General Motors |
| Enbridge Pref 11 |
GM and Enbridge Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Enbridge Pref
The main advantage of trading using opposite GM and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Enbridge Pref 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 Enbridge Pref will offset losses from the drop in Enbridge Pref's long position.The idea behind General Motors and Enbridge Pref 11 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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