Correlation Between Ensign Energy and Automotive Properties

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

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

Diversification Opportunities for Ensign Energy and Automotive Properties

0.37

Correlation Coefficient

Ensign Energy  Automotive Properties

Weak diversification

The 3 months correlation between Ensign and Automotive is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Automotive Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Properties and Ensign Energy 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 Ensign Energy Services are associated (or correlated) with Automotive Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Properties has no effect on the direction of Ensign Energy i.e., Ensign Energy and Automotive Properties go up and down completely randomly.

Pair Corralation between Ensign Energy and Automotive Properties

Assuming the 90 days trading horizon Ensign Energy Services is expected to under-perform the Automotive Properties. In addition to that, Ensign Energy is 2.32 times more volatile than Automotive Properties Real. It trades about -0.07 of its total potential returns per unit of risk. Automotive Properties Real is currently generating about -0.1 per unit of volatility. If you would invest  1,156  in Automotive Properties Real on December 26, 2024 and sell it today you would lose (104.00) from holding Automotive Properties Real or give up 9.0% of portfolio value over 90 days.

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

Ensign Energy Services  vs.  Automotive Properties Real

Ensign Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ensign Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Automotive Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Automotive Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ensign Energy and Automotive Properties

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

The idea behind Ensign Energy Services and Automotive Properties Real 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.