Correlation Between Natural Gas and Nextier Oilfield
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Nextier Oilfield 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 Nextier Oilfield 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 Nextier Oilfield Solutions, you can compare the effects of market volatilities on Natural Gas and Nextier Oilfield 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 Nextier Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Nextier Oilfield.
Diversification Opportunities for Natural Gas and Nextier Oilfield
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Natural and Nextier is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Nextier Oilfield Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextier Oilfield Sol 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 Nextier Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextier Oilfield Sol has no effect on the direction of Natural Gas i.e., Natural Gas and Nextier Oilfield go up and down completely randomly.
Pair Corralation between Natural Gas and Nextier Oilfield
Considering the 90-day investment horizon Natural Gas Services is expected to generate 0.76 times more return on investment than Nextier Oilfield. However, Natural Gas Services is 1.32 times less risky than Nextier Oilfield. It trades about 0.08 of its potential returns per unit of risk. Nextier Oilfield Solutions is currently generating about 0.05 per unit of risk. If you would invest 1,096 in Natural Gas Services on August 24, 2024 and sell it today you would earn a total of 1,692 from holding Natural Gas Services or generate 154.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 32.06% |
| Values | Daily Returns |
Natural Gas Services vs. Nextier Oilfield Solutions
Performance |
| Timeline |
| Natural Gas Services |
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Natural Gas and Nextier Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Nextier Oilfield
The main advantage of trading using opposite Natural Gas and Nextier Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Nextier Oilfield 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 Nextier Oilfield will offset losses from the drop in Nextier Oilfield's long position.| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
| Nextier Oilfield vs. ProPetro Holding Corp | Nextier Oilfield vs. Select Energy Services | Nextier Oilfield vs. Liberty Oilfield Services | Nextier Oilfield vs. Cactus Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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