Correlation Between Liberty Oilfield and Enerflex

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

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

Diversification Opportunities for Liberty Oilfield and Enerflex

-0.44

Correlation Coefficient

Liberty Oilfield  Enerflex

Very good diversification

The 3 months correlation between Liberty and Enerflex is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Liberty Oilfield 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 Liberty Oilfield Services 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 Liberty Oilfield i.e., Liberty Oilfield and Enerflex go up and down completely randomly.

Pair Corralation between Liberty Oilfield and Enerflex

Given the investment horizon of 90 days Liberty Oilfield is expected to generate 3.26 times less return on investment than Enerflex. In addition to that, Liberty Oilfield is 1.44 times more volatile than Enerflex. It trades about 0.14 of its total potential returns per unit of risk. Enerflex is currently generating about 0.66 per unit of volatility. If you would invest  687.00  in Enerflex on September 4, 2024 and sell it today you would earn a total of  235.00  from holding Enerflex or generate 34.21% return on investment over 90 days.

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

Liberty Oilfield Services  vs.  Enerflex

Liberty Oilfield Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enerflex

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Oilfield and Enerflex

The main advantage of trading using opposite Liberty Oilfield and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Oilfield 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 Liberty Oilfield Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.