Correlation Between Cactus and Enerflex
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Enerflex, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Enerflex.
Diversification Opportunities for Cactus and Enerflex
Poor diversification
The 3 months correlation between Cactus and Enerflex is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and Enerflex go up and down completely randomly.
Pair Corralation between Cactus and Enerflex
Considering the 90-day investment horizon Cactus is expected to generate 1.51 times less return on investment than Enerflex. But when comparing it to its historical volatility, Cactus Inc is 1.22 times less risky than Enerflex. It trades about 0.04 of its potential returns per unit of risk. Enerflex is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 611.00 in Enerflex on August 24, 2024 and sell it today you would earn a total of 329.00 from holding Enerflex or generate 53.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Enerflex
Performance |
| Timeline |
| Cactus Inc |
| Enerflex |
Cactus and Enerflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Enerflex
The main advantage of trading using opposite Cactus and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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