Correlation Between MRC Global and NCS Multistage
Can any of the company-specific risk be diversified away by investing in both MRC Global and NCS Multistage 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 NCS Multistage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRC Global and NCS Multistage Holdings, you can compare the effects of market volatilities on MRC Global and NCS Multistage 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 NCS Multistage. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and NCS Multistage.
Diversification Opportunities for MRC Global and NCS Multistage
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MRC and NCS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and NCS Multistage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCS Multistage Holdings 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 NCS Multistage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCS Multistage Holdings has no effect on the direction of MRC Global i.e., MRC Global and NCS Multistage go up and down completely randomly.
Pair Corralation between MRC Global and NCS Multistage
Considering the 90-day investment horizon MRC Global is expected to generate 1.71 times less return on investment than NCS Multistage. But when comparing it to its historical volatility, MRC Global is 1.15 times less risky than NCS Multistage. It trades about 0.04 of its potential returns per unit of risk. NCS Multistage Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,775 in NCS Multistage Holdings on September 2, 2024 and sell it today you would earn a total of 319.00 from holding NCS Multistage Holdings or generate 17.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
MRC Global vs. NCS Multistage Holdings
Performance |
| Timeline |
| MRC Global |
| NCS Multistage Holdings |
MRC Global and NCS Multistage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRC Global and NCS Multistage
The main advantage of trading using opposite MRC Global and NCS Multistage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global position performs unexpectedly, NCS Multistage 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 NCS Multistage will offset losses from the drop in NCS Multistage's long position.| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
| NCS Multistage vs. Bri Chem Corp | NCS Multistage vs. NXT Energy Solutions | NCS Multistage vs. Bristow Group | NCS Multistage vs. Natural Gas Services |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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