Correlation Between Now and National Energy
Can any of the company-specific risk be diversified away by investing in both Now and National Energy 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 Now and National Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and National Energy Services, you can compare the effects of market volatilities on Now and National Energy 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 Now with a short position of National Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and National Energy.
Diversification Opportunities for Now and National Energy
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Now and National is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Energy Services and Now 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 Now Inc are associated (or correlated) with National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Now i.e., Now and National Energy go up and down completely randomly.
Pair Corralation between Now and National Energy
Given the investment horizon of 90 days Now Inc is expected to generate 0.79 times more return on investment than National Energy. However, Now Inc is 1.27 times less risky than National Energy. It trades about 0.05 of its potential returns per unit of risk. National Energy Services is currently generating about -0.01 per unit of risk. If you would invest 1,361 in Now Inc on September 2, 2024 and sell it today you would earn a total of 144.00 from holding Now Inc or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. National Energy Services
Performance |
| Timeline |
| Now Inc |
| National Energy Services |
Now and National Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and National Energy
The main advantage of trading using opposite Now and National Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, National Energy 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 National Energy will offset losses from the drop in National Energy's long position.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Newpark Resources |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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