Correlation Between Liberty Oilfield and Superior Drilling
Can any of the company-specific risk be diversified away by investing in both Liberty Oilfield and Superior Drilling 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 Superior Drilling 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 Superior Drilling Products, you can compare the effects of market volatilities on Liberty Oilfield and Superior Drilling 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 Superior Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Oilfield and Superior Drilling.
Diversification Opportunities for Liberty Oilfield and Superior Drilling
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Liberty and Superior is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and Superior Drilling Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Drilling 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 Superior Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Drilling has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and Superior Drilling go up and down completely randomly.
Pair Corralation between Liberty Oilfield and Superior Drilling
Given the investment horizon of 90 days Liberty Oilfield Services is expected to generate 0.18 times more return on investment than Superior Drilling. However, Liberty Oilfield Services is 5.54 times less risky than Superior Drilling. It trades about -0.06 of its potential returns per unit of risk. Superior Drilling Products is currently generating about -0.18 per unit of risk. If you would invest 2,376 in Liberty Oilfield Services on August 28, 2024 and sell it today you would lose (504.00) from holding Liberty Oilfield Services or give up 21.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 35.71% |
| Values | Daily Returns |
Liberty Oilfield Services vs. Superior Drilling Products
Performance |
| Timeline |
| Liberty Oilfield Services |
| Superior Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Liberty Oilfield and Superior Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Oilfield and Superior Drilling
The main advantage of trading using opposite Liberty Oilfield and Superior Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Oilfield position performs unexpectedly, Superior Drilling 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 Superior Drilling will offset losses from the drop in Superior Drilling's long position.| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield vs. Newpark Resources |
| Superior Drilling vs. Geospace Technologies | Superior Drilling vs. Enerflex | Superior Drilling vs. MRC Global | Superior Drilling vs. Now Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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