Correlation Between KLX Energy and Oil States
Can any of the company-specific risk be diversified away by investing in both KLX Energy and Oil States 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 KLX Energy and Oil States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLX Energy Services and Oil States International, you can compare the effects of market volatilities on KLX Energy and Oil States 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 KLX Energy with a short position of Oil States. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLX Energy and Oil States.
Diversification Opportunities for KLX Energy and Oil States
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KLX and Oil is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KLX Energy Services and Oil States International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil States International and KLX Energy 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 KLX Energy Services are associated (or correlated) with Oil States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil States International has no effect on the direction of KLX Energy i.e., KLX Energy and Oil States go up and down completely randomly.
Pair Corralation between KLX Energy and Oil States
Given the investment horizon of 90 days KLX Energy Services is expected to generate 2.96 times more return on investment than Oil States. However, KLX Energy is 2.96 times more volatile than Oil States International. It trades about 0.42 of its potential returns per unit of risk. Oil States International is currently generating about 0.66 per unit of risk. If you would invest 441.00 in KLX Energy Services on October 20, 2024 and sell it today you would earn a total of 224.00 from holding KLX Energy Services or generate 50.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KLX Energy Services vs. Oil States International
Performance |
| Timeline |
| KLX Energy Services |
| Oil States International |
KLX Energy and Oil States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLX Energy and Oil States
The main advantage of trading using opposite KLX Energy and Oil States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLX Energy position performs unexpectedly, Oil States 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 Oil States will offset losses from the drop in Oil States' long position.| KLX Energy vs. RPC Inc | KLX Energy vs. ProPetro Holding Corp | KLX Energy vs. Ranger Energy Services | KLX Energy vs. Flotek Industries |
| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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