Correlation Between NCS Multistage and Nine Energy
Can any of the company-specific risk be diversified away by investing in both NCS Multistage 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 NCS Multistage and Nine Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCS Multistage Holdings and Nine Energy Service, you can compare the effects of market volatilities on NCS Multistage 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 NCS Multistage with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCS Multistage and Nine Energy.
Diversification Opportunities for NCS Multistage and Nine Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between NCS and Nine is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding NCS Multistage Holdings 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 NCS Multistage 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 NCS Multistage Holdings 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 NCS Multistage i.e., NCS Multistage and Nine Energy go up and down completely randomly.
Pair Corralation between NCS Multistage and Nine Energy
Given the investment horizon of 90 days NCS Multistage Holdings is expected to generate 0.58 times more return on investment than Nine Energy. However, NCS Multistage Holdings is 1.74 times less risky than Nine Energy. It trades about 0.02 of its potential returns per unit of risk. Nine Energy Service is currently generating about -0.04 per unit of risk. If you would invest 2,452 in NCS Multistage Holdings on December 2, 2024 and sell it today you would earn a total of 241.00 from holding NCS Multistage Holdings or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.98% |
| Values | Daily Returns |
NCS Multistage Holdings vs. Nine Energy Service
Performance |
| Timeline |
| NCS Multistage Holdings |
| Nine Energy Service |
NCS Multistage and Nine Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCS Multistage and Nine Energy
The main advantage of trading using opposite NCS Multistage and Nine Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCS Multistage 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.| NCS Multistage vs. Bri Chem Corp | ||
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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