Correlation Between National Energy and Schlumberger
Can any of the company-specific risk be diversified away by investing in both National Energy and Schlumberger 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 Schlumberger 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 Schlumberger NV, you can compare the effects of market volatilities on National Energy and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and Schlumberger.
Diversification Opportunities for National Energy and Schlumberger
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Schlumberger is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of National Energy i.e., National Energy and Schlumberger go up and down completely randomly.
Pair Corralation between National Energy and Schlumberger
Given the investment horizon of 90 days National Energy Services is expected to under-perform the Schlumberger. In addition to that, National Energy is 1.17 times more volatile than Schlumberger NV. It trades about -0.11 of its total potential returns per unit of risk. Schlumberger NV is currently generating about 0.21 per unit of volatility. If you would invest 4,015 in Schlumberger NV on August 31, 2024 and sell it today you would earn a total of 351.00 from holding Schlumberger NV or generate 8.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Energy Services vs. Schlumberger NV
Performance |
| Timeline |
| National Energy Services |
| Schlumberger NV |
National Energy and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Energy and Schlumberger
The main advantage of trading using opposite National Energy and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
| Schlumberger vs. Baker Hughes Co | Schlumberger vs. NOV Inc | Schlumberger vs. Weatherford International PLC | Schlumberger vs. Tenaris SA ADR |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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