Correlation Between Secure Energy and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Secure Energy 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 Secure Energy and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Secure Energy Services and Ensign Energy Services, you can compare the effects of market volatilities on Secure Energy 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 Secure Energy with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and Ensign Energy.
Diversification Opportunities for Secure Energy and Ensign Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Secure and Ensign is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services 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 Secure 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 Secure Energy Services 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 Secure Energy i.e., Secure Energy and Ensign Energy go up and down completely randomly.
Pair Corralation between Secure Energy and Ensign Energy
Assuming the 90 days trading horizon Secure Energy Services is expected to generate 1.17 times more return on investment than Ensign Energy. However, Secure Energy is 1.17 times more volatile than Ensign Energy Services. It trades about 0.35 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.3 per unit of risk. If you would invest 1,359 in Secure Energy Services on August 27, 2024 and sell it today you would earn a total of 259.00 from holding Secure Energy Services or generate 19.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Secure Energy Services vs. Ensign Energy Services
Performance |
| Timeline |
| Secure Energy Services |
| Ensign Energy Services |
Secure Energy and Ensign Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Secure Energy and Ensign Energy
The main advantage of trading using opposite Secure Energy and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Secure Energy 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.| Secure Energy vs. CES Energy Solutions | Secure Energy vs. Ensign Energy Services | Secure Energy vs. Enerflex | Secure Energy vs. Pason Systems |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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