Correlation Between AKITA Drilling and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both AKITA Drilling and Ensign Energy 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 AKITA Drilling and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AKITA Drilling and Ensign Energy Services, you can compare the effects of market volatilities on AKITA Drilling and Ensign Energy 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 AKITA Drilling with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of AKITA Drilling and Ensign Energy.
Diversification Opportunities for AKITA Drilling and Ensign Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AKITA and Ensign is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding AKITA Drilling and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services and AKITA Drilling 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 AKITA Drilling are associated (or correlated) with Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of AKITA Drilling i.e., AKITA Drilling and Ensign Energy go up and down completely randomly.
Pair Corralation between AKITA Drilling and Ensign Energy
Assuming the 90 days trading horizon AKITA Drilling is expected to generate 1.03 times more return on investment than Ensign Energy. However, AKITA Drilling is 1.03 times more volatile than Ensign Energy Services. It trades about 0.01 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.01 per unit of risk. If you would invest 181.00 in AKITA Drilling on August 28, 2024 and sell it today you would lose (19.00) from holding AKITA Drilling or give up 10.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AKITA Drilling vs. Ensign Energy Services
Performance |
| Timeline |
| AKITA Drilling |
| Ensign Energy Services |
AKITA Drilling and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AKITA Drilling and Ensign Energy
The main advantage of trading using opposite AKITA Drilling and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AKITA Drilling position performs unexpectedly, Ensign Energy 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 Ensign Energy will offset losses from the drop in Ensign Energy's long position.| AKITA Drilling vs. Ensign Energy Services | AKITA Drilling vs. Total Energy Services | AKITA Drilling vs. PHX Energy Services |
| Ensign Energy vs. Precision Drilling | Ensign Energy vs. Trican Well Service | Ensign Energy vs. Calfrac Well Services | Ensign Energy vs. NuVista Energy |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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