Correlation Between Natural Gas and Cactus
Can any of the company-specific risk be diversified away by investing in both Natural Gas and Cactus 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 Cactus 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 Cactus Inc, you can compare the effects of market volatilities on Natural Gas and Cactus 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 Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Gas and Cactus.
Diversification Opportunities for Natural Gas and Cactus
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Natural and Cactus is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Natural Gas Services and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Natural Gas i.e., Natural Gas and Cactus go up and down completely randomly.
Pair Corralation between Natural Gas and Cactus
Considering the 90-day investment horizon Natural Gas Services is expected to generate 1.04 times more return on investment than Cactus. However, Natural Gas is 1.04 times more volatile than Cactus Inc. It trades about 0.45 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.23 per unit of risk. If you would invest 1,964 in Natural Gas Services on August 24, 2024 and sell it today you would earn a total of 759.00 from holding Natural Gas Services or generate 38.65% 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. Cactus Inc
Performance |
| Timeline |
| Natural Gas Services |
| Cactus Inc |
Natural Gas and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Gas and Cactus
The main advantage of trading using opposite Natural Gas and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Gas position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Natural Gas vs. Enerflex | Natural Gas vs. Forum Energy Technologies | Natural Gas vs. Archrock | Natural Gas vs. Geospace Technologies |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |