Correlation Between Dawson Geophysical and KLX Energy
Can any of the company-specific risk be diversified away by investing in both Dawson Geophysical and KLX 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 Dawson Geophysical and KLX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawson Geophysical and KLX Energy Services, you can compare the effects of market volatilities on Dawson Geophysical and KLX 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 Dawson Geophysical with a short position of KLX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawson Geophysical and KLX Energy.
Diversification Opportunities for Dawson Geophysical and KLX Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dawson and KLX is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and KLX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Energy Services and Dawson Geophysical 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 Dawson Geophysical are associated (or correlated) with KLX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Energy Services has no effect on the direction of Dawson Geophysical i.e., Dawson Geophysical and KLX Energy go up and down completely randomly.
Pair Corralation between Dawson Geophysical and KLX Energy
Given the investment horizon of 90 days Dawson Geophysical is expected to under-perform the KLX Energy. But the stock apears to be less risky and, when comparing its historical volatility, Dawson Geophysical is 1.1 times less risky than KLX Energy. The stock trades about -0.04 of its potential returns per unit of risk. The KLX Energy Services is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 456.00 in KLX Energy Services on August 28, 2024 and sell it today you would earn a total of 193.00 from holding KLX Energy Services or generate 42.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawson Geophysical vs. KLX Energy Services
Performance |
| Timeline |
| Dawson Geophysical |
| KLX Energy Services |
Dawson Geophysical and KLX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawson Geophysical and KLX Energy
The main advantage of trading using opposite Dawson Geophysical and KLX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawson Geophysical position performs unexpectedly, KLX 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 KLX Energy will offset losses from the drop in KLX Energy's long position.| Dawson Geophysical vs. NXT Energy Solutions | Dawson Geophysical vs. Mccoy Global | Dawson Geophysical vs. National Energy Services | Dawson Geophysical vs. Ranger Energy Services |
| KLX Energy vs. ProPetro Holding Corp | KLX Energy vs. RPC Inc | KLX Energy vs. MRC Global | KLX Energy 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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