Correlation Between Ensign Energy and GDI Integrated

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

Diversification Opportunities for Ensign Energy and GDI Integrated

0.23

Correlation Coefficient

Ensign Energy  GDI Integrated

Modest diversification

The 3 months correlation between Ensign and GDI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated 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 GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of Ensign Energy i.e., Ensign Energy and GDI Integrated go up and down completely randomly.

Pair Corralation between Ensign Energy and GDI Integrated

Assuming the 90 days trading horizon Ensign Energy is expected to generate 1.66 times less return on investment than GDI Integrated. In addition to that, Ensign Energy is 1.83 times more volatile than GDI Integrated. It trades about 0.04 of its total potential returns per unit of risk. GDI Integrated is currently generating about 0.13 per unit of volatility. If you would invest  3,696  in GDI Integrated on October 7, 2024 and sell it today you would earn a total of  304.00  from holding GDI Integrated or generate 8.23% return on investment over 90 days.

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

Ensign Energy Services  vs.  GDI Integrated

Ensign Energy Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensign Energy Services are ranked lower than 9 (%) 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.

GDI Integrated

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, GDI Integrated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ensign Energy and GDI Integrated

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

The idea behind Ensign Energy Services and GDI Integrated 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.