Correlation Between National Energy and USA Compression
Can any of the company-specific risk be diversified away by investing in both National Energy and USA Compression 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 USA Compression 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 USA Compression Partners, you can compare the effects of market volatilities on National Energy and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Energy and USA Compression.
Diversification Opportunities for National Energy and USA Compression
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and USA is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Energy Services and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of National Energy i.e., National Energy and USA Compression go up and down completely randomly.
Pair Corralation between National Energy and USA Compression
Given the investment horizon of 90 days National Energy Services is expected to under-perform the USA Compression. In addition to that, National Energy is 1.38 times more volatile than USA Compression Partners. It trades about -0.16 of its total potential returns per unit of risk. USA Compression Partners is currently generating about 0.21 per unit of volatility. If you would invest 2,208 in USA Compression Partners on August 26, 2024 and sell it today you would earn a total of 164.00 from holding USA Compression Partners or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Energy Services vs. USA Compression Partners
Performance |
| Timeline |
| National Energy Services |
| USA Compression Partners |
National Energy and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Energy and USA Compression
The main advantage of trading using opposite National Energy and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Energy position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| National Energy vs. Dawson Geophysical | National Energy vs. Mccoy Global | National Energy vs. Ranger Energy Services | National Energy vs. MRC Global |
| USA Compression vs. ProPetro Holding Corp | USA Compression vs. RPC Inc | USA Compression vs. MRC Global | USA Compression vs. Expro Group Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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