Correlation Between Enerflex and Now

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

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

Diversification Opportunities for Enerflex and Now

0.59

Correlation Coefficient

Enerflex  Now

Very weak diversification

The 3 months correlation between Enerflex and Now is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Enerflex 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 Enerflex are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Enerflex i.e., Enerflex and Now go up and down completely randomly.

Pair Corralation between Enerflex and Now

Given the investment horizon of 90 days Enerflex is expected to generate 0.68 times more return on investment than Now. However, Enerflex is 1.46 times less risky than Now. It trades about 0.6 of its potential returns per unit of risk. Now Inc is currently generating about 0.24 per unit of risk. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Enerflex  vs.  Now Inc

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.

Now Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Now Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Now showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enerflex and Now

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

The idea behind Enerflex and Now Inc 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.