Correlation Between Enerflex and Zions Bancorporation

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

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

Diversification Opportunities for Enerflex and Zions Bancorporation

-0.64

Correlation Coefficient

Enerflex  Zions Bancorporation

Excellent diversification

The 3 months correlation between Enerflex and Zions is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex and Zions Bancorp. NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zions Bancorporation 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 Zions Bancorporation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zions Bancorporation has no effect on the direction of Enerflex i.e., Enerflex and Zions Bancorporation go up and down completely randomly.

Pair Corralation between Enerflex and Zions Bancorporation

Given the investment horizon of 90 days Enerflex is expected to generate 17.93 times more return on investment than Zions Bancorporation. However, Enerflex is 17.93 times more volatile than Zions Bancorporation NA. It trades about 0.3 of its potential returns per unit of risk. Zions Bancorporation NA is currently generating about 0.1 per unit of risk. If you would invest  834.00  in Enerflex on September 16, 2024 and sell it today you would earn a total of  114.00  from holding Enerflex or generate 13.67% return on investment over 90 days.

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

Enerflex  vs.  Zions Bancorp. NA

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.

Zions Bancorporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zions Bancorporation NA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Zions Bancorporation is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Enerflex and Zions Bancorporation

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

The idea behind Enerflex and Zions Bancorporation NA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.