Correlation Between Kodiak Gas and Cactus
Can any of the company-specific risk be diversified away by investing in both Kodiak Gas and Cactus 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 Kodiak Gas and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kodiak Gas Services, and Cactus Inc, you can compare the effects of market volatilities on Kodiak Gas and Cactus 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 Kodiak Gas with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kodiak Gas and Cactus.
Diversification Opportunities for Kodiak Gas and Cactus
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kodiak and Cactus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and Kodiak Gas 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 Kodiak Gas Services, are associated (or correlated) with Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Kodiak Gas i.e., Kodiak Gas and Cactus go up and down completely randomly.
Pair Corralation between Kodiak Gas and Cactus
Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 0.74 times more return on investment than Cactus. However, Kodiak Gas Services, is 1.36 times less risky than Cactus. It trades about 0.49 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.28 per unit of risk. If you would invest 3,129 in Kodiak Gas Services, on August 27, 2024 and sell it today you would earn a total of 843.00 from holding Kodiak Gas Services, or generate 26.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kodiak Gas Services, vs. Cactus Inc
Performance |
| Timeline |
| Kodiak Gas Services, |
| Cactus Inc |
Kodiak Gas and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kodiak Gas and Cactus
The main advantage of trading using opposite Kodiak Gas and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Gas position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Kodiak Gas vs. ProPetro Holding Corp | Kodiak Gas vs. RPC Inc | Kodiak Gas vs. MRC Global | Kodiak Gas vs. Expro Group Holdings |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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