Correlation Between Dorel Industries and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Dorel Industries 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 Dorel Industries and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Ensign Energy Services, you can compare the effects of market volatilities on Dorel Industries 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 Dorel Industries with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Ensign Energy.
Diversification Opportunities for Dorel Industries and Ensign Energy
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dorel and Ensign is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries 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 Dorel Industries 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 Dorel Industries 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 Dorel Industries i.e., Dorel Industries and Ensign Energy go up and down completely randomly.
Pair Corralation between Dorel Industries and Ensign Energy
Assuming the 90 days trading horizon Dorel Industries is expected to under-perform the Ensign Energy. But the stock apears to be less risky and, when comparing its historical volatility, Dorel Industries is 1.03 times less risky than Ensign Energy. The stock trades about 0.0 of its potential returns per unit of risk. The Ensign Energy Services is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 342.00 in Ensign Energy Services on August 28, 2024 and sell it today you would lose (36.00) from holding Ensign Energy Services or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Ensign Energy Services
Performance |
| Timeline |
| Dorel Industries |
| Ensign Energy Services |
Dorel Industries and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Ensign Energy
The main advantage of trading using opposite Dorel Industries and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries 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.| Dorel Industries vs. Stella Jones | Dorel Industries vs. Winpak | Dorel Industries vs. Stantec | Dorel Industries vs. Gildan Activewear |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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