Correlation Between Enservco and Nine Energy

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

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

Diversification Opportunities for Enservco and Nine Energy

-0.41

Correlation Coefficient

Enservco  Nine Energy

Very good diversification

The 3 months correlation between Enservco and Nine is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Enservco Co and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and Enservco 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 Enservco Co are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of Enservco i.e., Enservco and Nine Energy go up and down completely randomly.

Pair Corralation between Enservco and Nine Energy

Given the investment horizon of 90 days Enservco Co is expected to under-perform the Nine Energy. In addition to that, Enservco is 1.42 times more volatile than Nine Energy Service. It trades about -0.1 of its total potential returns per unit of risk. Nine Energy Service is currently generating about 0.11 per unit of volatility. If you would invest  114.00  in Nine Energy Service on August 31, 2024 and sell it today you would earn a total of  45.00  from holding Nine Energy Service or generate 39.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.19%
Values	Daily Returns

Enservco Co  vs.  Nine Energy Service

Enservco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enservco Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nine Energy Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enservco and Nine Energy

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

The idea behind Enservco Co and Nine Energy Service 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.