Correlation Between Flotek Industries and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Flotek Industries and Weatherford International 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 Weatherford International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flotek Industries and Weatherford International PLC, you can compare the effects of market volatilities on Flotek Industries and Weatherford International 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 Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flotek Industries and Weatherford International.
Diversification Opportunities for Flotek Industries and Weatherford International
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flotek and Weatherford is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Flotek Industries and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Flotek Industries i.e., Flotek Industries and Weatherford International go up and down completely randomly.
Pair Corralation between Flotek Industries and Weatherford International
Considering the 90-day investment horizon Flotek Industries is expected to generate 1.58 times more return on investment than Weatherford International. However, Flotek Industries is 1.58 times more volatile than Weatherford International PLC. It trades about 0.09 of its potential returns per unit of risk. Weatherford International PLC is currently generating about 0.0 per unit of risk. If you would invest 382.00 in Flotek Industries on August 24, 2024 and sell it today you would earn a total of 424.00 from holding Flotek Industries or generate 110.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flotek Industries vs. Weatherford International PLC
Performance |
| Timeline |
| Flotek Industries |
| Weatherford International |
Flotek Industries and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flotek Industries and Weatherford International
The main advantage of trading using opposite Flotek Industries and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flotek Industries position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International'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 |
| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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