Correlation Between NOV and Cactus
Can any of the company-specific risk be diversified away by investing in both NOV 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 NOV and Cactus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOV Inc and Cactus Inc, you can compare the effects of market volatilities on NOV 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 NOV with a short position of Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOV and Cactus.
Diversification Opportunities for NOV and Cactus
Average diversification
The 3 months correlation between NOV and Cactus is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc and NOV 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 NOV Inc 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 NOV i.e., NOV and Cactus go up and down completely randomly.
Pair Corralation between NOV and Cactus
Considering the 90-day investment horizon NOV is expected to generate 2.15 times less return on investment than Cactus. But when comparing it to its historical volatility, NOV Inc is 1.35 times less risky than Cactus. It trades about 0.14 of its potential returns per unit of risk. Cactus Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 5,869 in Cactus Inc on August 24, 2024 and sell it today you would earn a total of 976.00 from holding Cactus Inc or generate 16.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOV Inc vs. Cactus Inc
Performance |
| Timeline |
| NOV Inc |
| Cactus Inc |
NOV and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOV and Cactus
The main advantage of trading using opposite NOV and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOV 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.The idea behind NOV Inc and Cactus Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |