Correlation Between North American and Enerflex

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

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

Diversification Opportunities for North American and Enerflex

0.31

Correlation Coefficient

North American  Enerflex

Weak diversification

The 3 months correlation between North and Enerflex is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and North American 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 North American Construction 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 North American i.e., North American and Enerflex go up and down completely randomly.

Pair Corralation between North American and Enerflex

Assuming the 90 days trading horizon North American is expected to generate 23.84 times less return on investment than Enerflex. In addition to that, North American is 1.05 times more volatile than Enerflex. It trades about 0.01 of its total potential returns per unit of risk. Enerflex is currently generating about 0.17 per unit of volatility. If you would invest  916.00  in Enerflex on April 24, 2025 and sell it today you would earn a total of  171.00  from holding Enerflex or generate 18.67% return on investment over 90 days.

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

North American Construction  vs.  Enerflex

North American Const

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, North American is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Enerflex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Enerflex displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North American and Enerflex

The main advantage of trading using opposite North American and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American 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 North American Construction 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 CEOs Directory module to screen CEOs from public companies around the world.