Correlation Between Natural Gas and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Geospace Technologies 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 Natural Gas and Geospace Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Gas Services and Geospace Technologies, you can compare the effects of market volatilities on Natural Gas and Geospace Technologies 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 Natural Gas with a short position of Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Geospace Technologies.
Diversification Opportunities for Natural Gas and Geospace Technologies
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Geospace is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies and Natural Gas 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 Natural Gas Services are associated (or correlated) with Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Natural Gas i.e., Natural Gas and Geospace Technologies go up and down completely randomly.
Pair Corralation between Natural Gas and Geospace Technologies
Considering the 90-day investment horizon Natural Gas Services is expected to generate 0.6 times more return on investment than Geospace Technologies. However, Natural Gas Services is 1.68 times less risky than Geospace Technologies. It trades about 0.47 of its potential returns per unit of risk. Geospace Technologies is currently generating about -0.02 per unit of risk. If you would invest 1,993 in Natural Gas Services on August 28, 2024 and sell it today you would earn a total of 752.00 from holding Natural Gas Services or generate 37.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Gas Services vs. Geospace Technologies
Performance |
| Timeline |
| Natural Gas Services |
| Geospace Technologies |
Natural Gas and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Geospace Technologies
The main advantage of trading using opposite Natural Gas and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Natural Gas vs. ProPetro Holding Corp | Natural Gas vs. RPC Inc | Natural Gas vs. MRC Global | Natural Gas vs. Expro Group Holdings |
| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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