Correlation Between National Energy and Enerflex
Can any of the company-specific risk be diversified away by investing in both National 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 National Energy and Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Energy Services and Enerflex, you can compare the effects of market volatilities on National 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 National Energy with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and Enerflex.
Diversification Opportunities for National Energy and Enerflex
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Enerflex is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and National 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 National 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 National Energy i.e., National Energy and Enerflex go up and down completely randomly.
Pair Corralation between National Energy and Enerflex
Given the investment horizon of 90 days National Energy Services is expected to under-perform the Enerflex. In addition to that, National Energy is 1.24 times more volatile than Enerflex. It trades about -0.01 of its total potential returns per unit of risk. Enerflex is currently generating about 0.23 per unit of volatility. If you would invest 477.00 in Enerflex on September 2, 2024 and sell it today you would earn a total of 438.00 from holding Enerflex or generate 91.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Energy Services vs. Enerflex
Performance |
| Timeline |
| National Energy Services |
| Enerflex |
National Energy and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Energy and Enerflex
The main advantage of trading using opposite National Energy and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National 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.| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
| Enerflex vs. Natural Gas Services | Enerflex vs. Archrock | Enerflex vs. Geospace Technologies | Enerflex vs. Newpark Resources |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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