Correlation Between Nextier Oilfield and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Nextier Oilfield and Natural Gas 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 Natural Gas 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 Natural Gas Services, you can compare the effects of market volatilities on Nextier Oilfield and Natural Gas 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 Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextier Oilfield and Natural Gas.
Diversification Opportunities for Nextier Oilfield and Natural Gas
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nextier and Natural is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions and Natural Gas Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Services 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 Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Services has no effect on the direction of Nextier Oilfield i.e., Nextier Oilfield and Natural Gas go up and down completely randomly.
Pair Corralation between Nextier Oilfield and Natural Gas
If you would invest 1,462 in Natural Gas Services on August 28, 2024 and sell it today you would earn a total of 1,283 from holding Natural Gas Services or generate 87.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.48% |
| Values | Daily Returns |
Nextier Oilfield Solutions vs. Natural Gas Services
Performance |
| Timeline |
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Natural Gas Services |
Nextier Oilfield and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextier Oilfield and Natural Gas
The main advantage of trading using opposite Nextier Oilfield and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextier Oilfield position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' 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 |
| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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