Correlation Between Nine Energy and Houston American
Can any of the company-specific risk be diversified away by investing in both Nine Energy and Houston American 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 Nine Energy and Houston American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Energy Service and Houston American Energy, you can compare the effects of market volatilities on Nine Energy and Houston American 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 Nine Energy with a short position of Houston American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and Houston American.
Diversification Opportunities for Nine Energy and Houston American
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nine and Houston is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and Houston American Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houston American Energy and Nine Energy 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 Nine Energy Service are associated (or correlated) with Houston American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houston American Energy has no effect on the direction of Nine Energy i.e., Nine Energy and Houston American go up and down completely randomly.
Pair Corralation between Nine Energy and Houston American
Given the investment horizon of 90 days Nine Energy Service is expected to under-perform the Houston American. But the stock apears to be less risky and, when comparing its historical volatility, Nine Energy Service is 1.51 times less risky than Houston American. The stock trades about -0.05 of its potential returns per unit of risk. The Houston American Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 139.00 in Houston American Energy on November 4, 2024 and sell it today you would earn a total of 9.00 from holding Houston American Energy or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Nine Energy Service vs. Houston American Energy
Performance |
| Timeline |
| Nine Energy Service |
| Houston American Energy |
Nine Energy and Houston American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Energy and Houston American
The main advantage of trading using opposite Nine Energy and Houston American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Energy position performs unexpectedly, Houston American 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 Houston American will offset losses from the drop in Houston American's long position.| Nine Energy vs. Liberty Oilfield Services | Nine Energy vs. ProFrac Holding Corp | Nine Energy vs. Helix Energy Solutions | Nine Energy vs. Enerflex |
| Houston American vs. Indonesia Energy | Houston American vs. Imperial Petroleum | Houston American vs. Nine Energy Service |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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