Correlation Between IA Financial and Enbridge Pref

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

By analyzing existing cross correlation between iA Financial and Enbridge Pref 5, you can compare the effects of market volatilities on IA Financial 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 IA Financial with a short position of Enbridge Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA Financial and Enbridge Pref.

Diversification Opportunities for IA Financial and Enbridge Pref

0.87

Correlation Coefficient

IA Financial  Enbridge Pref

Very poor diversification

The 3 months correlation between IAG and Enbridge is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iA Financial and Enbridge Pref 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge Pref 5 and IA Financial 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 iA Financial 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 5 has no effect on the direction of IA Financial i.e., IA Financial and Enbridge Pref go up and down completely randomly.

Pair Corralation between IA Financial and Enbridge Pref

Assuming the 90 days trading horizon iA Financial is expected to generate 2.23 times more return on investment than Enbridge Pref. However, IA Financial is 2.23 times more volatile than Enbridge Pref 5. It trades about 0.08 of its potential returns per unit of risk. Enbridge Pref 5 is currently generating about 0.1 per unit of risk. If you would invest  8,567  in iA Financial on April 20, 2025 and sell it today you would earn a total of  5,923  from holding iA Financial or generate 69.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.16%
Values	Daily Returns

iA Financial  vs.  Enbridge Pref 5

iA Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iA Financial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IA Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

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 17 (%) 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.

Pair Trading with IA Financial and Enbridge Pref

The main advantage of trading using opposite IA Financial and Enbridge Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Financial 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.

The idea behind iA Financial and Enbridge Pref 5 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 CEOs Directory module to screen CEOs from public companies around the world.