Correlation Between MRC Global and Kodiak Gas
Can any of the company-specific risk be diversified away by investing in both MRC Global and Kodiak Gas 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 MRC Global and Kodiak Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRC Global and Kodiak Gas Services,, you can compare the effects of market volatilities on MRC Global and Kodiak Gas 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 MRC Global with a short position of Kodiak Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and Kodiak Gas.
Diversification Opportunities for MRC Global and Kodiak Gas
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MRC and Kodiak is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and Kodiak Gas Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kodiak Gas Services, and MRC Global 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 MRC Global are associated (or correlated) with Kodiak Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kodiak Gas Services, has no effect on the direction of MRC Global i.e., MRC Global and Kodiak Gas go up and down completely randomly.
Pair Corralation between MRC Global and Kodiak Gas
Considering the 90-day investment horizon MRC Global is expected to generate 1.71 times less return on investment than Kodiak Gas. In addition to that, MRC Global is 1.52 times more volatile than Kodiak Gas Services,. It trades about 0.18 of its total potential returns per unit of risk. Kodiak Gas Services, is currently generating about 0.47 per unit of volatility. If you would invest 3,140 in Kodiak Gas Services, on August 31, 2024 and sell it today you would earn a total of 842.00 from holding Kodiak Gas Services, or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRC Global vs. Kodiak Gas Services,
Performance |
| Timeline |
| MRC Global |
| Kodiak Gas Services, |
MRC Global and Kodiak Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRC Global and Kodiak Gas
The main advantage of trading using opposite MRC Global and Kodiak Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global position performs unexpectedly, Kodiak Gas 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 Kodiak Gas will offset losses from the drop in Kodiak Gas' long position.| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
| Kodiak Gas vs. Newpark Resources | Kodiak Gas vs. Tenaris SA ADR | Kodiak Gas vs. Dawson Geophysical | Kodiak Gas vs. Bristow Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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