Correlation Between Liberty Oilfield and Nine Energy
Can any of the company-specific risk be diversified away by investing in both Liberty Oilfield and Nine 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 Liberty Oilfield and Nine Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Oilfield Services and Nine Energy Service, you can compare the effects of market volatilities on Liberty Oilfield and Nine 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 Liberty Oilfield with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Oilfield and Nine Energy.
Diversification Opportunities for Liberty Oilfield and Nine Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and Nine is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and Liberty Oilfield 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 Liberty Oilfield Services are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and Nine Energy go up and down completely randomly.
Pair Corralation between Liberty Oilfield and Nine Energy
Given the investment horizon of 90 days Liberty Oilfield is expected to generate 2.63 times less return on investment than Nine Energy. But when comparing it to its historical volatility, Liberty Oilfield Services is 2.99 times less risky than Nine Energy. It trades about 0.15 of its potential returns per unit of risk. Nine Energy Service is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 103.00 in Nine Energy Service on August 24, 2024 and sell it today you would earn a total of 23.00 from holding Nine Energy Service or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Oilfield Services vs. Nine Energy Service
Performance |
| Timeline |
| Liberty Oilfield Services |
| Nine Energy Service |
Liberty Oilfield and Nine Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Oilfield and Nine Energy
The main advantage of trading using opposite Liberty Oilfield and Nine Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Oilfield position performs unexpectedly, Nine 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 Nine Energy will offset losses from the drop in Nine Energy's long position.| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield vs. Newpark Resources |
| Nine Energy vs. Liberty Oilfield Services | Nine Energy vs. ProFrac Holding Corp | Nine Energy vs. Helix Energy Solutions | Nine Energy vs. Newpark Resources |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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