Correlation Between Enbridge Pref and Source Rock

Can any of the company-specific risk be diversified away by investing in both Enbridge Pref and Source Rock 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 Source Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enbridge Pref 5 and Source Rock Royalties, you can compare the effects of market volatilities on Enbridge Pref and Source Rock 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 Source Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enbridge Pref and Source Rock.

Diversification Opportunities for Enbridge Pref and Source Rock

0.0

Correlation Coefficient

Enbridge Pref  Source Rock

Pay attention - limited upside

The 3 months correlation between Enbridge and Source is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enbridge Pref 5 and Source Rock Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Rock Royalties 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 5 are associated (or correlated) with Source Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Rock Royalties has no effect on the direction of Enbridge Pref i.e., Enbridge Pref and Source Rock go up and down completely randomly.

Pair Corralation between Enbridge Pref and Source Rock

If you would invest  2,247  in Enbridge Pref 5 on April 23, 2025 and sell it today you would earn a total of  169.00  from holding Enbridge Pref 5 or generate 7.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.79%
Values	Daily Returns

Enbridge Pref 5  vs.  Source Rock Royalties

Enbridge Pref 5

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enbridge Pref 5 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Enbridge Pref may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Source Rock Royalties

Risk-Adjusted Performance

Insignificant

Over the last 90 days Source Rock Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Source Rock is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enbridge Pref and Source Rock

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

The idea behind Enbridge Pref 5 and Source Rock Royalties 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.