Correlation Between Ensign Energy and True North
Can any of the company-specific risk be diversified away by investing in both Ensign Energy and True North 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 True North 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 True North Commercial, you can compare the effects of market volatilities on Ensign Energy and True North 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 True North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ensign Energy and True North.
Diversification Opportunities for Ensign Energy and True North
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ensign and True is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial 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 True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Ensign Energy i.e., Ensign Energy and True North go up and down completely randomly.
Pair Corralation between Ensign Energy and True North
Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 0.83 times more return on investment than True North. However, Ensign Energy Services is 1.21 times less risky than True North. It trades about 0.0 of its potential returns per unit of risk. True North Commercial is currently generating about -0.04 per unit of risk. If you would invest 329.00 in Ensign Energy Services on September 12, 2024 and sell it today you would lose (53.00) from holding Ensign Energy Services or give up 16.11% 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. True North Commercial
Performance |
| Timeline |
| Ensign Energy Services |
| True North Commercial |
Ensign Energy and True North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ensign Energy and True North
The main advantage of trading using opposite Ensign Energy and True North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ensign Energy position performs unexpectedly, True North 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 True North will offset losses from the drop in True North'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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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