Correlation Between Enbridge Pref and SPTSX Dividend

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

Diversification Opportunities for Enbridge Pref and SPTSX Dividend

0.99

Correlation Coefficient

Enbridge Pref  SPTSX Dividend

No risk reduction

The 3 months correlation between Enbridge and SPTSX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 11 and SPTSX Dividend Aristocrats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPTSX Dividend Arist 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 SPTSX Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPTSX Dividend Arist has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and SPTSX Dividend go up and down completely randomly.

Pair Corralation between Enbridge Pref and SPTSX Dividend

Assuming the 90 days trading horizon Enbridge Pref 11 is expected to generate 1.19 times more return on investment than SPTSX Dividend. However, Enbridge Pref is 1.19 times more volatile than SPTSX Dividend Aristocrats. It trades about 0.52 of its potential returns per unit of risk. SPTSX Dividend Aristocrats is currently generating about 0.39 per unit of risk. If you would invest  1,832  in Enbridge Pref 11 on April 23, 2025 and sell it today you would earn a total of  264.00  from holding Enbridge Pref 11 or generate 14.41% return on investment over 90 days.

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

Enbridge Pref 11  vs.  SPTSX Dividend Aristocrats

Pair Trading with Enbridge Pref and SPTSX Dividend

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

The idea behind Enbridge Pref 11 and SPTSX Dividend Aristocrats 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.