Correlation Between Archrock and Now
Can any of the company-specific risk be diversified away by investing in both Archrock and Now 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 Archrock and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and Now Inc, you can compare the effects of market volatilities on Archrock and Now 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 Archrock with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and Now.
Diversification Opportunities for Archrock and Now
Almost no diversification
The 3 months correlation between Archrock and Now is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Archrock 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 Archrock are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Archrock i.e., Archrock and Now go up and down completely randomly.
Pair Corralation between Archrock and Now
Given the investment horizon of 90 days Archrock is expected to generate 1.02 times more return on investment than Now. However, Archrock is 1.02 times more volatile than Now Inc. It trades about 0.21 of its potential returns per unit of risk. Now Inc is currently generating about 0.16 per unit of risk. If you would invest 2,007 in Archrock on August 30, 2024 and sell it today you would earn a total of 485.00 from holding Archrock or generate 24.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archrock vs. Now Inc
Performance |
| Timeline |
| Archrock |
| Now Inc |
Archrock and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archrock and Now
The main advantage of trading using opposite Archrock and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific Holdings |
| Now vs. DXP Enterprises | Now vs. Watsco Inc | Now vs. Distribution Solutions Group | Now vs. SiteOne Landscape Supply |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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