Correlation Between STEP Energy and Enerflex

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

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

Diversification Opportunities for STEP Energy and Enerflex

0.61

Correlation Coefficient

STEP Energy  Enerflex

Poor diversification

The 3 months correlation between STEP and Enerflex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding STEP Energy Services and Enerflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enerflex and STEP Energy 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 STEP Energy Services 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 STEP Energy i.e., STEP Energy and Enerflex go up and down completely randomly.

Pair Corralation between STEP Energy and Enerflex

Assuming the 90 days trading horizon STEP Energy Services is expected to generate 1.53 times more return on investment than Enerflex. However, STEP Energy is 1.53 times more volatile than Enerflex. It trades about 0.32 of its potential returns per unit of risk. Enerflex is currently generating about 0.1 per unit of risk. If you would invest  404.00  in STEP Energy Services on April 22, 2025 and sell it today you would earn a total of  57.00  from holding STEP Energy Services or generate 14.11% return on investment over 90 days.

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

STEP Energy Services  vs.  Enerflex

STEP Energy Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STEP Energy Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, STEP Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Enerflex

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Enerflex displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STEP Energy and Enerflex

The main advantage of trading using opposite STEP Energy and Enerflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STEP Energy 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 STEP Energy Services 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.