Correlation Between Enerflex and DRQ Old

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Can any of the company-specific risk be diversified away by investing in both Enerflex and DRQ Old 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 DRQ Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enerflex and DRQ Old, you can compare the effects of market volatilities on Enerflex and DRQ Old 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 DRQ Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerflex and DRQ Old.

Diversification Opportunities for Enerflex and DRQ Old

-0.78
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Enerflex and DRQ is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and DRQ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DRQ Old 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 DRQ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DRQ Old has no effect on the direction of Enerflex i.e., Enerflex and DRQ Old go up and down completely randomly.

Pair Corralation between Enerflex and DRQ Old

Given the investment horizon of 90 days Enerflex is expected to generate 1.13 times more return on investment than DRQ Old. However, Enerflex is 1.13 times more volatile than DRQ Old. It trades about 0.04 of its potential returns per unit of risk. DRQ Old is currently generating about -0.04 per unit of risk. If you would invest  720.00  in Enerflex on October 21, 2024 and sell it today you would earn a total of  324.00  from holding Enerflex or generate 45.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy81.85%
ValuesDaily Returns

Enerflex  vs.  DRQ Old

 Performance 
       Timeline  
Enerflex 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 29 (%) 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.
DRQ Old 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DRQ Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, DRQ Old is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Enerflex and DRQ Old Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Enerflex and DRQ Old

The main advantage of trading using opposite Enerflex and DRQ Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerflex position performs unexpectedly, DRQ Old 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 DRQ Old will offset losses from the drop in DRQ Old's long position.
The idea behind Enerflex and DRQ Old 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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