Correlation Between Enservco and National Energy

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

By analyzing existing cross correlation between Enservco Co and National Energy Services, you can compare the effects of market volatilities on Enservco and National Energy 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 Enservco with a short position of National Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enservco and National Energy.

Diversification Opportunities for Enservco and National Energy

0.15

Correlation Coefficient

Enservco  National Energy

Average diversification

The 3 months correlation between Enservco and National is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Energy Services and Enservco 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 Enservco Co are associated (or correlated) with National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Enservco i.e., Enservco and National Energy go up and down completely randomly.

Pair Corralation between Enservco and National Energy

Given the investment horizon of 90 days Enservco Co is expected to under-perform the National Energy. In addition to that, Enservco is 1.9 times more volatile than National Energy Services. It trades about -0.07 of its total potential returns per unit of risk. National Energy Services is currently generating about 0.03 per unit of volatility. If you would invest  725.00  in National Energy Services on October 10, 2024 and sell it today you would earn a total of  122.00  from holding National Energy Services or generate 16.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.92%
Values	Daily Returns

Enservco Co  vs.  National Energy Services

Enservco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enservco Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

National Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Enservco and National Energy

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

The idea behind Enservco Co and National Energy 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.