Correlation Between Core Laboratories and Cactus
Can any of the company-specific risk be diversified away by investing in both Core Laboratories and Cactus 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 Cactus 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 Cactus Inc, you can compare the effects of market volatilities on Core Laboratories and Cactus 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 Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Laboratories and Cactus.
Diversification Opportunities for Core Laboratories and Cactus
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Core and Cactus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Core Laboratories NV and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Core Laboratories i.e., Core Laboratories and Cactus go up and down completely randomly.
Pair Corralation between Core Laboratories and Cactus
Considering the 90-day investment horizon Core Laboratories NV is expected to generate 1.17 times more return on investment than Cactus. However, Core Laboratories is 1.17 times more volatile than Cactus Inc. It trades about 0.27 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.23 per unit of risk. If you would invest 1,707 in Core Laboratories NV on August 24, 2024 and sell it today you would earn a total of 405.00 from holding Core Laboratories NV or generate 23.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Laboratories NV vs. Cactus Inc
Performance |
| Timeline |
| Core Laboratories |
| Cactus Inc |
Core Laboratories and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Laboratories and Cactus
The main advantage of trading using opposite Core Laboratories and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Laboratories position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Core Laboratories vs. Bristow Group | Core Laboratories vs. RPC Inc | Core Laboratories vs. NOV Inc | Core Laboratories vs. Oceaneering International |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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