Correlation Between Enbridge Pref and Petrus Resources

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Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and Petrus Resources 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 Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enbridge Pref 11 and Petrus Resources, you can compare the effects of market volatilities on Enbridge Pref and Petrus Resources 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 Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Petrus Resources.

Diversification Opportunities for Enbridge Pref and Petrus Resources

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Enbridge and Petrus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources 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 11 are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Petrus Resources go up and down completely randomly.

Pair Corralation between Enbridge Pref and Petrus Resources

Assuming the 90 days trading horizon Enbridge Pref is expected to generate 4.04 times less return on investment than Petrus Resources. But when comparing it to its historical volatility, Enbridge Pref 11 is 4.18 times less risky than Petrus Resources. It trades about 0.17 of its potential returns per unit of risk. Petrus Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  144.00  in Petrus Resources on September 1, 2025 and sell it today you would earn a total of  35.00  from holding Petrus Resources or generate 24.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Enbridge Pref 11  vs.  Petrus Resources

 Performance 
       Timeline  
Enbridge Pref 11 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Enbridge Pref is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.
Petrus Resources 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Petrus Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrus Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Enbridge Pref and Petrus Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enbridge Pref and Petrus Resources

The main advantage of trading using opposite Enbridge Pref and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enbridge Pref position performs unexpectedly, Petrus Resources 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.
The idea behind Enbridge Pref 11 and Petrus Resources 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.
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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