Correlation Between National Energy and NCS Multistage
Can any of the company-specific risk be diversified away by investing in both National Energy 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 National Energy and NCS Multistage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Energy Services and NCS Multistage Holdings, you can compare the effects of market volatilities on National Energy 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 National Energy with a short position of NCS Multistage. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and NCS Multistage.
Diversification Opportunities for National Energy and NCS Multistage
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and NCS is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services 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 National Energy 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 National Energy Services 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 National Energy i.e., National Energy and NCS Multistage go up and down completely randomly.
Pair Corralation between National Energy and NCS Multistage
Given the investment horizon of 90 days National Energy Services is expected to under-perform the NCS Multistage. In addition to that, National Energy is 1.1 times more volatile than NCS Multistage Holdings. It trades about -0.01 of its total potential returns per unit of risk. NCS Multistage Holdings is currently generating about 0.06 per unit of volatility. 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 Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
National Energy Services vs. NCS Multistage Holdings
Performance |
| Timeline |
| National Energy Services |
| NCS Multistage Holdings |
National Energy and NCS Multistage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Energy and NCS Multistage
The main advantage of trading using opposite National Energy and NCS Multistage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy 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.| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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