Correlation Between Ensign Energy and Enerflex
Can any of the company-specific risk be diversified away by investing in both Ensign Energy and Enerflex 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 Ensign Energy and Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ensign Energy Services and Enerflex, you can compare the effects of market volatilities on Ensign Energy and Enerflex 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 Ensign Energy with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign Energy and Enerflex.
Diversification Opportunities for Ensign Energy and Enerflex
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ensign and Enerflex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Ensign Energy 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 Ensign Energy Services are associated (or correlated) with Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Ensign Energy i.e., Ensign Energy and Enerflex go up and down completely randomly.
Pair Corralation between Ensign Energy and Enerflex
Assuming the 90 days trading horizon Ensign Energy is expected to generate 2.95 times less return on investment than Enerflex. But when comparing it to its historical volatility, Ensign Energy Services is 1.0 times less risky than Enerflex. It trades about 0.3 of its potential returns per unit of risk. Enerflex is currently generating about 0.87 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Enerflex on August 27, 2024 and sell it today you would earn a total of 414.00 from holding Enerflex or generate 46.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ensign Energy Services vs. Enerflex
Performance |
| Timeline |
| Ensign Energy Services |
| Enerflex |
Ensign Energy and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign Energy and Enerflex
The main advantage of trading using opposite Ensign Energy and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign Energy position performs unexpectedly, Enerflex 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 Enerflex will offset losses from the drop in Enerflex's long position.| Ensign Energy vs. Precision Drilling | Ensign Energy vs. Trican Well Service | Ensign Energy vs. Calfrac Well Services | Ensign Energy vs. NuVista Energy |
| Enerflex vs. Falcon Energy Materials | Enerflex vs. NexPoint Hospitality Trust | Enerflex vs. Quipt Home Medical | Enerflex vs. Medical Facilities |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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