Correlation Between Now and USA Compression
Can any of the company-specific risk be diversified away by investing in both Now 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 Now and USA Compression into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Now Inc and USA Compression Partners, you can compare the effects of market volatilities on Now 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 Now with a short position of USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Now and USA Compression.
Diversification Opportunities for Now and USA Compression
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Now and USA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Now Inc 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 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 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 Now i.e., Now and USA Compression go up and down completely randomly.
Pair Corralation between Now and USA Compression
Given the investment horizon of 90 days Now is expected to generate 2.9 times less return on investment than USA Compression. But when comparing it to its historical volatility, Now Inc is 1.28 times less risky than USA Compression. It trades about 0.27 of its potential returns per unit of risk. USA Compression Partners is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest 2,254 in USA Compression Partners on October 24, 2024 and sell it today you would earn a total of 363.00 from holding USA Compression Partners or generate 16.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Now Inc vs. USA Compression Partners
Performance |
| Timeline |
| Now Inc |
| USA Compression Partners |
Now and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Now and USA Compression
The main advantage of trading using opposite Now and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Now 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.| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Enerflex |
| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression vs. Geospace Technologies |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |