Correlation Between Core Laboratories and USA Compression
Can any of the company-specific risk be diversified away by investing in both Core Laboratories and USA Compression 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 Core Laboratories and USA Compression into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Laboratories NV and USA Compression Partners, you can compare the effects of market volatilities on Core Laboratories and USA Compression 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 Core Laboratories with a short position of USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Laboratories and USA Compression.
Diversification Opportunities for Core Laboratories and USA Compression
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Core and USA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners and Core Laboratories 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 Core Laboratories NV are associated (or correlated) with USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Core Laboratories i.e., Core Laboratories and USA Compression go up and down completely randomly.
Pair Corralation between Core Laboratories and USA Compression
Considering the 90-day investment horizon Core Laboratories NV is expected to generate 2.13 times more return on investment than USA Compression. However, Core Laboratories is 2.13 times more volatile than USA Compression Partners. It trades about 0.05 of its potential returns per unit of risk. USA Compression Partners is currently generating about 0.03 per unit of risk. If you would invest 1,852 in Core Laboratories NV on August 26, 2024 and sell it today you would earn a total of 276.00 from holding Core Laboratories NV or generate 14.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Laboratories NV vs. USA Compression Partners
Performance |
| Timeline |
| Core Laboratories |
| USA Compression Partners |
Core Laboratories and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Laboratories and USA Compression
The main advantage of trading using opposite Core Laboratories and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Laboratories position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| Core Laboratories vs. Bristow Group | Core Laboratories vs. RPC Inc | Core Laboratories vs. NOV Inc | Core Laboratories vs. Oceaneering International |
| USA Compression vs. ProPetro Holding Corp | USA Compression vs. RPC Inc | USA Compression vs. MRC Global | USA Compression vs. Expro Group Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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