Correlation Between Enerflex and NOV

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

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

Diversification Opportunities for Enerflex and NOV

-0.23

Correlation Coefficient

Enerflex  NOV

Very good diversification

The 3 months correlation between Enerflex and NOV is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Enerflex i.e., Enerflex and NOV go up and down completely randomly.

Pair Corralation between Enerflex and NOV

Given the investment horizon of 90 days Enerflex is expected to generate 1.1 times more return on investment than NOV. However, Enerflex is 1.1 times more volatile than NOV Inc. It trades about 0.44 of its potential returns per unit of risk. NOV Inc is currently generating about -0.05 per unit of risk. If you would invest  540.00  in Enerflex on September 15, 2024 and sell it today you would earn a total of  409.00  from holding Enerflex or generate 75.74% return on investment over 90 days.

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

Enerflex  vs.  NOV Inc

Enerflex

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 34 (%) 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.

NOV Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Enerflex and NOV

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

The idea behind Enerflex and NOV Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.