Correlation Between Flotek Industries and National Energy
Can any of the company-specific risk be diversified away by investing in both Flotek Industries 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 Flotek Industries and National Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flotek Industries and National Energy Services, you can compare the effects of market volatilities on Flotek Industries 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 Flotek Industries with a short position of National Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flotek Industries and National Energy.
Diversification Opportunities for Flotek Industries and National Energy
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flotek and National is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries 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 Flotek Industries 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 Flotek Industries 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 Flotek Industries i.e., Flotek Industries and National Energy go up and down completely randomly.
Pair Corralation between Flotek Industries and National Energy
Considering the 90-day investment horizon Flotek Industries is expected to generate 2.2 times more return on investment than National Energy. However, Flotek Industries is 2.2 times more volatile than National Energy Services. It trades about 0.04 of its potential returns per unit of risk. National Energy Services is currently generating about 0.05 per unit of risk. If you would invest 884.00 in Flotek Industries on November 18, 2024 and sell it today you would earn a total of 18.00 from holding Flotek Industries or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flotek Industries vs. National Energy Services
Performance |
| Timeline |
| Flotek Industries |
| National Energy Services |
Flotek Industries and National Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flotek Industries and National Energy
The main advantage of trading using opposite Flotek Industries and National Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flotek Industries 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.| Flotek Industries vs. ProPetro Holding Corp | Flotek Industries vs. Liberty Oilfield Services | Flotek Industries vs. KLX Energy Services | Flotek Industries vs. MRC Global |
| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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