Correlation Between Dril Quip and Enerflex

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

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

Diversification Opportunities for Dril Quip and Enerflex

-0.63

Correlation Coefficient

Dril Quip  Enerflex

Excellent diversification

The 3 months correlation between Dril and Enerflex is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dril Quip and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Dril Quip 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 Dril Quip 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 Dril Quip i.e., Dril Quip and Enerflex go up and down completely randomly.

Pair Corralation between Dril Quip and Enerflex

If you would invest  660.00  in Enerflex on August 21, 2024 and sell it today you would earn a total of  218.00  from holding Enerflex or generate 33.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Dril Quip  vs.  Enerflex

Dril Quip

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Dril Quip has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively unsteady basic indicators, Dril Quip may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 weak basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dril Quip and Enerflex

The main advantage of trading using opposite Dril Quip and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dril Quip 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 Dril Quip 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.