Correlation Between Now and Trican Well
Can any of the company-specific risk be diversified away by investing in both Now and Trican Well 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 Trican Well into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and Trican Well Service, you can compare the effects of market volatilities on Now and Trican Well 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 Trican Well. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and Trican Well.
Diversification Opportunities for Now and Trican Well
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Now and Trican is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc and Trican Well Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trican Well Service 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 Trican Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trican Well Service has no effect on the direction of Now i.e., Now and Trican Well go up and down completely randomly.
Pair Corralation between Now and Trican Well
Given the investment horizon of 90 days Now is expected to generate 1.06 times less return on investment than Trican Well. In addition to that, Now is 1.02 times more volatile than Trican Well Service. It trades about 0.05 of its total potential returns per unit of risk. Trican Well Service is currently generating about 0.05 per unit of volatility. If you would invest 308.00 in Trican Well Service on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Trican Well Service or generate 12.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Now Inc vs. Trican Well Service
Performance |
| Timeline |
| Now Inc |
| Trican Well Service |
Now and Trican Well Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and Trican Well
The main advantage of trading using opposite Now and Trican Well positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now position performs unexpectedly, Trican Well 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 Trican Well will offset losses from the drop in Trican Well'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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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