Correlation Between Ensign Energy and Goodfellow

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

Diversification Opportunities for Ensign Energy and Goodfellow

-0.73

Correlation Coefficient

Ensign Energy  Goodfellow

Pay attention - limited upside

The 3 months correlation between Ensign and Goodfellow is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ensign Energy Services and Goodfellow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodfellow 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 Goodfellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodfellow has no effect on the direction of Ensign Energy i.e., Ensign Energy and Goodfellow go up and down completely randomly.

Pair Corralation between Ensign Energy and Goodfellow

Assuming the 90 days trading horizon Ensign Energy Services is expected to generate 1.77 times more return on investment than Goodfellow. However, Ensign Energy is 1.77 times more volatile than Goodfellow. It trades about 0.11 of its potential returns per unit of risk. Goodfellow is currently generating about -0.14 per unit of risk. If you would invest  278.00  in Ensign Energy Services on October 24, 2024 and sell it today you would earn a total of  48.00  from holding Ensign Energy Services or generate 17.27% return on investment over 90 days.

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

Ensign Energy Services  vs.  Goodfellow

Ensign Energy Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ensign Energy Services are ranked lower than 8 (%) 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.

Goodfellow

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodfellow 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 essential indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ensign Energy and Goodfellow

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

The idea behind Ensign Energy Services and Goodfellow 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.