Correlation Between Ensign Energy and Major Drilling
Can any of the company-specific risk be diversified away by investing in both Ensign Energy and Major Drilling 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 Major Drilling 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 Major Drilling Group, you can compare the effects of market volatilities on Ensign Energy and Major Drilling 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 Major Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign Energy and Major Drilling.
Diversification Opportunities for Ensign Energy and Major Drilling
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ensign and Major is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Major Drilling Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Drilling Group 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 Major Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Drilling Group has no effect on the direction of Ensign Energy i.e., Ensign Energy and Major Drilling go up and down completely randomly.
Pair Corralation between Ensign Energy and Major Drilling
Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 0.89 times more return on investment than Major Drilling. However, Ensign Energy Services is 1.12 times less risky than Major Drilling. It trades about 0.2 of its potential returns per unit of risk. Major Drilling Group is currently generating about 0.04 per unit of risk. If you would invest 284.00 in Ensign Energy Services on August 26, 2024 and sell it today you would earn a total of 28.00 from holding Ensign Energy Services or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ensign Energy Services vs. Major Drilling Group
Performance |
| Timeline |
| Ensign Energy Services |
| Major Drilling Group |
Ensign Energy and Major Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign Energy and Major Drilling
The main advantage of trading using opposite Ensign Energy and Major Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign Energy position performs unexpectedly, Major Drilling 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 Major Drilling will offset losses from the drop in Major Drilling'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 |
| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |