Correlation Between Enservco and Ranger Energy

Can any of the company-specific risk be diversified away by investing in both Enservco and Ranger 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 Ranger 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 Ranger Energy Services, you can compare the effects of market volatilities on Enservco and Ranger 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 Ranger Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enservco and Ranger Energy.

Diversification Opportunities for Enservco and Ranger Energy

-0.03

Correlation Coefficient

Enservco  Ranger Energy

Good diversification

The 3 months correlation between Enservco and Ranger is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger 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 Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of Enservco i.e., Enservco and Ranger Energy go up and down completely randomly.

Pair Corralation between Enservco and Ranger Energy

Given the investment horizon of 90 days Enservco Co is expected to under-perform the Ranger Energy. In addition to that, Enservco is 2.84 times more volatile than Ranger Energy Services. It trades about -0.07 of its total potential returns per unit of risk. Ranger Energy Services is currently generating about 0.04 per unit of volatility. If you would invest  1,084  in Ranger Energy Services on September 19, 2024 and sell it today you would earn a total of  400.00  from holding Ranger Energy Services or generate 36.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.35%
Values	Daily Returns

Enservco Co  vs.  Ranger 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Ranger Energy Services

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enservco and Ranger Energy

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

The idea behind Enservco Co and Ranger 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.