Correlation Between Ensign Energy and Dream Residential

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

Diversification Opportunities for Ensign Energy and Dream Residential

-0.43

Correlation Coefficient

Ensign Energy  Dream Residential

Very good diversification

The 3 months correlation between Ensign and Dream is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Dream Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Residential Real 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 Dream Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Residential Real has no effect on the direction of Ensign Energy i.e., Ensign Energy and Dream Residential go up and down completely randomly.

Pair Corralation between Ensign Energy and Dream Residential

Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 1.5 times more return on investment than Dream Residential. However, Ensign Energy is 1.5 times more volatile than Dream Residential Real. It trades about 0.07 of its potential returns per unit of risk. Dream Residential Real is currently generating about -0.05 per unit of risk. If you would invest  266.00  in Ensign Energy Services on September 18, 2024 and sell it today you would earn a total of  26.00  from holding Ensign Energy Services or generate 9.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ensign Energy Services  vs.  Dream Residential Real

Ensign Energy Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ensign Energy Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Ensign Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dream Residential Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dream Residential Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dream Residential is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ensign Energy and Dream Residential

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

The idea behind Ensign Energy Services and Dream Residential 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..