Correlation Between PrairieSky Royalty and Enerflex
Can any of the company-specific risk be diversified away by investing in both PrairieSky Royalty 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 PrairieSky Royalty and Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PrairieSky Royalty and Enerflex, you can compare the effects of market volatilities on PrairieSky Royalty 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 PrairieSky Royalty with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of PrairieSky Royalty and Enerflex.
Diversification Opportunities for PrairieSky Royalty and Enerflex
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PrairieSky and Enerflex is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PrairieSky Royalty and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and PrairieSky Royalty 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 PrairieSky Royalty 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 PrairieSky Royalty i.e., PrairieSky Royalty and Enerflex go up and down completely randomly.
Pair Corralation between PrairieSky Royalty and Enerflex
Assuming the 90 days horizon PrairieSky Royalty is expected to generate 6.02 times less return on investment than Enerflex. But when comparing it to its historical volatility, PrairieSky Royalty is 1.46 times less risky than Enerflex. It trades about 0.06 of its potential returns per unit of risk. Enerflex is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 479.00 in Enerflex on September 1, 2024 and sell it today you would earn a total of 436.00 from holding Enerflex or generate 91.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
PrairieSky Royalty vs. Enerflex
Performance |
| Timeline |
| PrairieSky Royalty |
| Enerflex |
PrairieSky Royalty and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PrairieSky Royalty and Enerflex
The main advantage of trading using opposite PrairieSky Royalty and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PrairieSky Royalty 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.| PrairieSky Royalty vs. Petroleo Brasileiro Petrobras | PrairieSky Royalty vs. Equinor ASA ADR | PrairieSky Royalty vs. Eni SpA ADR | PrairieSky Royalty vs. YPF Sociedad Anonima |
| 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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