Correlation Between Enbridge Pref and CHEVRON CDR

Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and CHEVRON CDR 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 CHEVRON CDR 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 CHEVRON CDR, you can compare the effects of market volatilities on Enbridge Pref and CHEVRON CDR 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 CHEVRON CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and CHEVRON CDR.

Diversification Opportunities for Enbridge Pref and CHEVRON CDR

0.8

Correlation Coefficient

Enbridge Pref  CHEVRON CDR

Very poor diversification

The 3 months correlation between Enbridge and CHEVRON is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and CHEVRON CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON CDR 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 CHEVRON CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON CDR has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and CHEVRON CDR go up and down completely randomly.

Pair Corralation between Enbridge Pref and CHEVRON CDR

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 0.29 times more return on investment than CHEVRON CDR. However, Enbridge Pref 11 is 3.43 times less risky than CHEVRON CDR. It trades about 0.54 of its potential returns per unit of risk. CHEVRON CDR is currently generating about 0.1 per unit of risk. If you would invest  1,828  in Enbridge Pref 11 on April 24, 2025 and sell it today you would earn a total of  270.00  from holding Enbridge Pref 11 or generate 14.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Enbridge Pref 11  vs.  CHEVRON CDR

Enbridge Pref 11

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 11 are ranked lower than 42 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Enbridge Pref exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHEVRON CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHEVRON CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, CHEVRON CDR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Enbridge Pref and CHEVRON CDR

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

The idea behind Enbridge Pref 11 and CHEVRON CDR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.