Correlation Between Microsoft and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ensign Energy Services, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ensign Energy.
Diversification Opportunities for Microsoft and Ensign Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and Ensign is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Ensign Energy go up and down completely randomly.
Pair Corralation between Microsoft and Ensign Energy
Given the investment horizon of 90 days Microsoft is expected to under-perform the Ensign Energy. But the stock apears to be less risky and, when comparing its historical volatility, Microsoft is 1.32 times less risky than Ensign Energy. The stock trades about -0.06 of its potential returns per unit of risk. The Ensign Energy Services is currently generating about 0.2 of returns per unit of risk over similar time horizon. 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 |
Microsoft vs. Ensign Energy Services
Performance |
| Timeline |
| Microsoft |
| Ensign Energy Services |
Microsoft and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ensign Energy
The main advantage of trading using opposite Microsoft and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 Inc |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |