Correlation Between NXT Energy and Nine Energy
Can any of the company-specific risk be diversified away by investing in both NXT Energy and Nine Energy 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 NXT Energy and Nine Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NXT Energy Solutions and Nine Energy Service, you can compare the effects of market volatilities on NXT Energy and Nine Energy 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 NXT Energy with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NXT Energy and Nine Energy.
Diversification Opportunities for NXT Energy and Nine Energy
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NXT and Nine is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NXT Energy Solutions and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and NXT 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 NXT Energy Solutions are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of NXT Energy i.e., NXT Energy and Nine Energy go up and down completely randomly.
Pair Corralation between NXT Energy and Nine Energy
Assuming the 90 days horizon NXT Energy is expected to generate 1.85 times less return on investment than Nine Energy. In addition to that, NXT Energy is 1.73 times more volatile than Nine Energy Service. It trades about 0.03 of its total potential returns per unit of risk. Nine Energy Service is currently generating about 0.1 per unit of volatility. If you would invest 115.00 in Nine Energy Service on August 28, 2024 and sell it today you would earn a total of 26.00 from holding Nine Energy Service or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NXT Energy Solutions vs. Nine Energy Service
Performance |
| Timeline |
| NXT Energy Solutions |
| Nine Energy Service |
NXT Energy and Nine Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NXT Energy and Nine Energy
The main advantage of trading using opposite NXT Energy and Nine Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NXT Energy position performs unexpectedly, Nine Energy 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 Nine Energy will offset losses from the drop in Nine Energy's long position.| NXT Energy vs. Dawson Geophysical | NXT Energy vs. Bri Chem Corp | NXT Energy vs. NCS Multistage Holdings | NXT Energy vs. Bristow Group |
| Nine Energy vs. Liberty Oilfield Services | Nine Energy vs. ProFrac Holding Corp | Nine Energy vs. Helix Energy Solutions | Nine Energy vs. Newpark Resources |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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