Correlation Between Advantage Oil and Ensign Energy
Can any of the company-specific risk be diversified away by investing in both Advantage Oil and Ensign 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 Advantage Oil and Ensign Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advantage Oil Gas and Ensign Energy Services, you can compare the effects of market volatilities on Advantage Oil and Ensign 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 Advantage Oil with a short position of Ensign Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Oil and Ensign Energy.
Diversification Opportunities for Advantage Oil and Ensign Energy
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advantage and Ensign is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Oil Gas and Ensign Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Energy Services and Advantage Oil 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 Advantage Oil Gas are associated (or correlated) with Ensign Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Energy Services has no effect on the direction of Advantage Oil i.e., Advantage Oil and Ensign Energy go up and down completely randomly.
Pair Corralation between Advantage Oil and Ensign Energy
Assuming the 90 days trading horizon Advantage Oil is expected to generate 2.43 times less return on investment than Ensign Energy. But when comparing it to its historical volatility, Advantage Oil Gas is 1.36 times less risky than Ensign Energy. It trades about 0.06 of its potential returns per unit of risk. Ensign Energy Services is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 189.00 in Ensign Energy Services on April 23, 2025 and sell it today you would earn a total of 36.00 from holding Ensign Energy Services or generate 19.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Advantage Oil Gas vs. Ensign Energy Services
Performance |
Timeline |
Advantage Oil Gas |
Ensign Energy Services |
Advantage Oil and Ensign Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advantage Oil and Ensign Energy
The main advantage of trading using opposite Advantage Oil and Ensign Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Oil position performs unexpectedly, Ensign 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 Ensign Energy will offset losses from the drop in Ensign Energy's long position.Advantage Oil vs. Birchcliff Energy | Advantage Oil vs. Kelt Exploration | Advantage Oil vs. NuVista Energy | Advantage Oil vs. Peyto ExplorationDevelopment Corp |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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