Correlation Between ProFrac Holding and Enerflex

Can any of the company-specific risk be diversified away by investing in both ProFrac Holding 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 ProFrac Holding and Enerflex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ProFrac Holding Corp and Enerflex, you can compare the effects of market volatilities on ProFrac Holding 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 ProFrac Holding with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProFrac Holding and Enerflex.

Diversification Opportunities for ProFrac Holding and Enerflex

0.65

Correlation Coefficient

ProFrac Holding  Enerflex

Poor diversification

The 3 months correlation between ProFrac and Enerflex is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ProFrac Holding Corp and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and ProFrac Holding 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 ProFrac Holding Corp 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 ProFrac Holding i.e., ProFrac Holding and Enerflex go up and down completely randomly.

Pair Corralation between ProFrac Holding and Enerflex

Given the investment horizon of 90 days ProFrac Holding is expected to generate 1.11 times less return on investment than Enerflex. In addition to that, ProFrac Holding is 2.05 times more volatile than Enerflex. It trades about 0.15 of its total potential returns per unit of risk. Enerflex is currently generating about 0.35 per unit of volatility. If you would invest  580.00  in Enerflex on September 4, 2024 and sell it today you would earn a total of  334.00  from holding Enerflex or generate 57.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ProFrac Holding Corp  vs.  Enerflex

ProFrac Holding Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProFrac Holding Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ProFrac Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Enerflex

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProFrac Holding and Enerflex

The main advantage of trading using opposite ProFrac Holding and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProFrac Holding 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.

The idea behind ProFrac Holding Corp and Enerflex pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.