Correlation Between Enerflex and Oil States

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

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

Diversification Opportunities for Enerflex and Oil States

0.3

Correlation Coefficient

Enerflex  Oil States

Weak diversification

The 3 months correlation between Enerflex and Oil is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Oil States International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil States International 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 Oil States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil States International has no effect on the direction of Enerflex i.e., Enerflex and Oil States go up and down completely randomly.

Pair Corralation between Enerflex and Oil States

Given the investment horizon of 90 days Enerflex is expected to under-perform the Oil States. But the stock apears to be less risky and, when comparing its historical volatility, Enerflex is 1.23 times less risky than Oil States. The stock trades about -0.17 of its potential returns per unit of risk. The Oil States International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  490.00  in Oil States International on December 28, 2024 and sell it today you would earn a total of  54.00  from holding Oil States International or generate 11.02% return on investment over 90 days.

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

Enerflex  vs.  Oil States International

Enerflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Oil States International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil States International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Oil States unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enerflex and Oil States

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

The idea behind Enerflex and Oil States International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.