Correlation Between Nextier Oilfield and MRC Global
Can any of the company-specific risk be diversified away by investing in both Nextier Oilfield and MRC Global 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 Nextier Oilfield and MRC Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextier Oilfield Solutions and MRC Global, you can compare the effects of market volatilities on Nextier Oilfield and MRC Global 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 Nextier Oilfield with a short position of MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextier Oilfield and MRC Global.
Diversification Opportunities for Nextier Oilfield and MRC Global
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextier and MRC is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global and Nextier Oilfield 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 Nextier Oilfield Solutions are associated (or correlated) with MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Nextier Oilfield i.e., Nextier Oilfield and MRC Global go up and down completely randomly.
Pair Corralation between Nextier Oilfield and MRC Global
Considering the 90-day investment horizon Nextier Oilfield Solutions is expected to generate 1.5 times more return on investment than MRC Global. However, Nextier Oilfield is 1.5 times more volatile than MRC Global. It trades about 0.1 of its potential returns per unit of risk. MRC Global is currently generating about 0.05 per unit of risk. If you would invest 856.00 in Nextier Oilfield Solutions on November 1, 2024 and sell it today you would earn a total of 279.00 from holding Nextier Oilfield Solutions or generate 32.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 19.62% |
| Values | Daily Returns |
Nextier Oilfield Solutions vs. MRC Global
Performance |
| Timeline |
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| MRC Global |
Nextier Oilfield and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextier Oilfield and MRC Global
The main advantage of trading using opposite Nextier Oilfield and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextier Oilfield position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Nextier Oilfield vs. ProPetro Holding Corp | Nextier Oilfield vs. Select Energy Services | Nextier Oilfield vs. Liberty Oilfield Services | Nextier Oilfield vs. Cactus Inc |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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