Correlation Between Canadian Solar and Enerflex

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

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

Diversification Opportunities for Canadian Solar and Enerflex

0.46

Correlation Coefficient

Canadian Solar  Enerflex

Very weak diversification

The 3 months correlation between Canadian and Enerflex is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Canadian Solar 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 Canadian Solar 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 Canadian Solar i.e., Canadian Solar and Enerflex go up and down completely randomly.

Pair Corralation between Canadian Solar and Enerflex

Given the investment horizon of 90 days Canadian Solar is expected to generate 1.52 times less return on investment than Enerflex. In addition to that, Canadian Solar is 1.65 times more volatile than Enerflex. It trades about 0.09 of its total potential returns per unit of risk. Enerflex is currently generating about 0.22 per unit of volatility. If you would invest  715.00  in Enerflex on May 18, 2025 and sell it today you would earn a total of  244.00  from holding Enerflex or generate 34.13% return on investment over 90 days.

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

Canadian Solar  vs.  Enerflex

Canadian Solar

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Canadian Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Enerflex

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 17 (%) 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 Canadian Solar and Enerflex

The main advantage of trading using opposite Canadian Solar and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Solar 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 Canadian Solar 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.