Correlation Between Ensign Energy and Brookfield Infrastructure

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

Diversification Opportunities for Ensign Energy and Brookfield Infrastructure

0.76

Correlation Coefficient

Ensign Energy  Brookfield Infrastructure

Poor diversification

The 3 months correlation between Ensign and Brookfield is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Brookfield Infrastructure Part in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Infrastructure 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 Brookfield Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Infrastructure has no effect on the direction of Ensign Energy i.e., Ensign Energy and Brookfield Infrastructure go up and down completely randomly.

Pair Corralation between Ensign Energy and Brookfield Infrastructure

Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 1.8 times more return on investment than Brookfield Infrastructure. However, Ensign Energy is 1.8 times more volatile than Brookfield Infrastructure Partners. It trades about 0.13 of its potential returns per unit of risk. Brookfield Infrastructure Partners is currently generating about 0.18 per unit of risk. If you would invest  243.00  in Ensign Energy Services on September 4, 2024 and sell it today you would earn a total of  49.00  from holding Ensign Energy Services or generate 20.16% return on investment over 90 days.

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

Ensign Energy Services  vs.  Brookfield Infrastructure Part

Ensign Energy Services

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensign Energy Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Ensign Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Infrastructure

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Infrastructure Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Brookfield Infrastructure sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ensign Energy and Brookfield Infrastructure

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

The idea behind Ensign Energy Services and Brookfield Infrastructure Partners 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.