Correlation Between Globex Mining and Enerflex

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

By analyzing existing cross correlation between Globex Mining Enterprises and Enerflex, you can compare the effects of market volatilities on Globex Mining and Enerflex 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 Globex Mining with a short position of Enerflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Enerflex.

Diversification Opportunities for Globex Mining and Enerflex

-0.56

Correlation Coefficient

Globex Mining  Enerflex

Excellent diversification

The 3 months correlation between Globex and Enerflex is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Enerflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enerflex has no effect on the direction of Globex Mining i.e., Globex Mining and Enerflex go up and down completely randomly.

Pair Corralation between Globex Mining and Enerflex

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 1.3 times more return on investment than Enerflex. However, Globex Mining is 1.3 times more volatile than Enerflex. It trades about 0.14 of its potential returns per unit of risk. Enerflex is currently generating about -0.18 per unit of risk. If you would invest  118.00  in Globex Mining Enterprises on December 28, 2024 and sell it today you would earn a total of  30.00  from holding Globex Mining Enterprises or generate 25.42% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Enerflex

Globex Mining Enterprises

Risk-Adjusted Performance

OK

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

Enerflex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enerflex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic 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.

Pair Trading with Globex Mining and Enerflex

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

The idea behind Globex Mining Enterprises and Enerflex 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.