Correlation Between Enerflex and Kodiak Gas

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

By analyzing existing cross correlation between Enerflex and Kodiak Gas Services,, you can compare the effects of market volatilities on Enerflex and Kodiak Gas 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 Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerflex and Kodiak Gas.

Diversification Opportunities for Enerflex and Kodiak Gas

0.98

Correlation Coefficient

Enerflex  Kodiak Gas

Almost no diversification

The 3 months correlation between Enerflex and Kodiak is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, 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 Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of Enerflex i.e., Enerflex and Kodiak Gas go up and down completely randomly.

Pair Corralation between Enerflex and Kodiak Gas

Given the investment horizon of 90 days Enerflex is expected to generate 0.71 times more return on investment than Kodiak Gas. However, Enerflex is 1.4 times less risky than Kodiak Gas. It trades about 0.05 of its potential returns per unit of risk. Kodiak Gas Services, is currently generating about -0.05 per unit of risk. If you would invest  924.00  in Enerflex on September 22, 2024 and sell it today you would earn a total of  13.00  from holding Enerflex or generate 1.41% return on investment over 90 days.

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

Enerflex  vs.  Kodiak Gas Services,

Enerflex

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kodiak Gas Services,

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kodiak Gas Services, are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Kodiak Gas unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enerflex and Kodiak Gas

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

The idea behind Enerflex and Kodiak Gas Services, 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.