Correlation Between Sage Potash and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Sage Potash 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 Sage Potash and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Potash Corp and Ensign Energy Services, you can compare the effects of market volatilities on Sage Potash 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 Sage Potash with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Ensign Energy.
Diversification Opportunities for Sage Potash and Ensign Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Ensign is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp 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 Sage Potash 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 Sage Potash Corp 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 Sage Potash i.e., Sage Potash and Ensign Energy go up and down completely randomly.
Pair Corralation between Sage Potash and Ensign Energy
Assuming the 90 days trading horizon Sage Potash Corp is expected to under-perform the Ensign Energy. In addition to that, Sage Potash is 2.55 times more volatile than Ensign Energy Services. It trades about -0.02 of its total potential returns per unit of risk. Ensign Energy Services is currently generating about 0.1 per unit of volatility. If you would invest 265.00 in Ensign Energy Services on August 30, 2024 and sell it today you would earn a total of 26.00 from holding Ensign Energy Services or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Potash Corp vs. Ensign Energy Services
Performance |
| Timeline |
| Sage Potash Corp |
| Ensign Energy Services |
Sage Potash and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Ensign Energy
The main advantage of trading using opposite Sage Potash and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash 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.| Sage Potash vs. Enbridge Pref 5 | Sage Potash vs. Enbridge Pref 11 | Sage Potash vs. Enbridge Pref L | Sage Potash vs. E Split Corp |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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