Correlation Between Enerflex and Nova Leap

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

By analyzing existing cross correlation between Enerflex and Nova Leap Health, you can compare the effects of market volatilities on Enerflex and Nova Leap 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 Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enerflex and Nova Leap.

Diversification Opportunities for Enerflex and Nova Leap

-0.03

Correlation Coefficient

Enerflex  Nova Leap

Good diversification

The 3 months correlation between Enerflex and Nova is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health 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 Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Enerflex i.e., Enerflex and Nova Leap go up and down completely randomly.

Pair Corralation between Enerflex and Nova Leap

Assuming the 90 days trading horizon Enerflex is expected to generate 0.58 times more return on investment than Nova Leap. However, Enerflex is 1.73 times less risky than Nova Leap. It trades about 0.51 of its potential returns per unit of risk. Nova Leap Health is currently generating about 0.02 per unit of risk. If you would invest  725.00  in Enerflex on September 13, 2024 and sell it today you would earn a total of  641.00  from holding Enerflex or generate 88.41% return on investment over 90 days.

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

Enerflex  vs.  Nova Leap Health

Enerflex

Risk-Adjusted Performance

39 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 39 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Enerflex displayed solid returns over the last few months and may actually be approaching a breakup point.

Nova Leap Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Leap Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Nova Leap is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Enerflex and Nova Leap

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

The idea behind Enerflex and Nova Leap Health 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.