Correlation Between VersaBank and Enbridge Pref
Can any of the company-specific risk be diversified away by investing in both VersaBank and Enbridge Pref 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 VersaBank and Enbridge Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Enbridge Pref 3, you can compare the effects of market volatilities on VersaBank 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 VersaBank with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Enbridge Pref.
Diversification Opportunities for VersaBank and Enbridge Pref
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VersaBank and Enbridge is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Enbridge Pref 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 3 and VersaBank 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 VersaBank 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 3 has no effect on the direction of VersaBank i.e., VersaBank and Enbridge Pref go up and down completely randomly.
Pair Corralation between VersaBank and Enbridge Pref
Assuming the 90 days trading horizon VersaBank is expected to under-perform the Enbridge Pref. In addition to that, VersaBank is 4.6 times more volatile than Enbridge Pref 3. It trades about -0.31 of its total potential returns per unit of risk. Enbridge Pref 3 is currently generating about 0.24 per unit of volatility. If you would invest 1,847 in Enbridge Pref 3 on October 12, 2024 and sell it today you would earn a total of 49.00 from holding Enbridge Pref 3 or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Enbridge Pref 3
Performance |
| Timeline |
| VersaBank |
| Enbridge Pref 3 |
VersaBank and Enbridge Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Enbridge Pref
The main advantage of trading using opposite VersaBank and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank 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.| VersaBank vs. Sylogist | VersaBank vs. Sangoma Technologies Corp | VersaBank vs. Firan Technology Group | VersaBank vs. Hammond Power Solutions |
| Enbridge Pref vs. Marimaca Copper Corp | Enbridge Pref vs. Pace Metals | Enbridge Pref vs. Metalero Mining Corp | Enbridge Pref vs. Homerun Resources |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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