Correlation Between Ensign Energy and Big Pharma
Can any of the company-specific risk be diversified away by investing in both Ensign Energy and Big Pharma 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 Big Pharma 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 Big Pharma Split, you can compare the effects of market volatilities on Ensign Energy and Big Pharma 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 Big Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign Energy and Big Pharma.
Diversification Opportunities for Ensign Energy and Big Pharma
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ensign and Big is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Big Pharma Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Pharma Split 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 Big Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Pharma Split has no effect on the direction of Ensign Energy i.e., Ensign Energy and Big Pharma go up and down completely randomly.
Pair Corralation between Ensign Energy and Big Pharma
Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 2.52 times more return on investment than Big Pharma. However, Ensign Energy is 2.52 times more volatile than Big Pharma Split. It trades about 0.01 of its potential returns per unit of risk. Big Pharma Split is currently generating about 0.01 per unit of risk. If you would invest 384.00 in Ensign Energy Services on October 9, 2024 and sell it today you would lose (48.00) from holding Ensign Energy Services or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ensign Energy Services vs. Big Pharma Split
Performance |
| Timeline |
| Ensign Energy Services |
| Big Pharma Split |
Ensign Energy and Big Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign Energy and Big Pharma
The main advantage of trading using opposite Ensign Energy and Big Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign Energy position performs unexpectedly, Big Pharma 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 Big Pharma will offset losses from the drop in Big Pharma'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 |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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