Correlation Between Enerflex and Mako Mining

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

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

Diversification Opportunities for Enerflex and Mako Mining

-0.09

Correlation Coefficient

Enerflex  Mako Mining

Good diversification

The 3 months correlation between Enerflex and Mako is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and Enerflex 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 Enerflex are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Enerflex i.e., Enerflex and Mako Mining go up and down completely randomly.

Pair Corralation between Enerflex and Mako Mining

Assuming the 90 days trading horizon Enerflex is expected to generate 0.94 times more return on investment than Mako Mining. However, Enerflex is 1.06 times less risky than Mako Mining. It trades about 0.48 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.01 per unit of risk. If you would invest  742.00  in Enerflex on September 12, 2024 and sell it today you would earn a total of  619.00  from holding Enerflex or generate 83.42% return on investment over 90 days.

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

Enerflex  vs.  Mako Mining Corp

Enerflex

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Enerflex displayed solid returns over the last few months and may actually be approaching a breakup point.

Mako Mining Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mako Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mako Mining is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enerflex and Mako Mining

The main advantage of trading using opposite Enerflex and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerflex position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining's long position.

The idea behind Enerflex and Mako Mining Corp 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.