Correlation Between Dawson Geophysical and Enerflex

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

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

Diversification Opportunities for Dawson Geophysical and Enerflex

-0.55

Correlation Coefficient

Dawson Geophysical  Enerflex

Excellent diversification

The 3 months correlation between Dawson and Enerflex is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and Dawson Geophysical 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 Dawson Geophysical 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 Dawson Geophysical i.e., Dawson Geophysical and Enerflex go up and down completely randomly.

Pair Corralation between Dawson Geophysical and Enerflex

Given the investment horizon of 90 days Dawson Geophysical is expected to generate 9.07 times less return on investment than Enerflex. In addition to that, Dawson Geophysical is 2.35 times more volatile than Enerflex. It trades about 0.02 of its total potential returns per unit of risk. Enerflex is currently generating about 0.43 per unit of volatility. If you would invest  540.00  in Enerflex on September 16, 2024 and sell it today you would earn a total of  408.00  from holding Enerflex or generate 75.56% return on investment over 90 days.

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

Dawson Geophysical  vs.  Enerflex

Dawson Geophysical

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Dawson Geophysical is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Enerflex

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 33 (%) 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 Dawson Geophysical and Enerflex

The main advantage of trading using opposite Dawson Geophysical and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawson Geophysical 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 Dawson Geophysical 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.