Correlation Between Oil States and KLX Energy
Can any of the company-specific risk be diversified away by investing in both Oil States and KLX 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 Oil States and KLX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil States International and KLX Energy Services, you can compare the effects of market volatilities on Oil States and KLX 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 Oil States with a short position of KLX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and KLX Energy.
Diversification Opportunities for Oil States and KLX Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and KLX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and KLX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Energy Services and Oil States 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 Oil States International are associated (or correlated) with KLX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Energy Services has no effect on the direction of Oil States i.e., Oil States and KLX Energy go up and down completely randomly.
Pair Corralation between Oil States and KLX Energy
Considering the 90-day investment horizon Oil States International is expected to generate 0.7 times more return on investment than KLX Energy. However, Oil States International is 1.42 times less risky than KLX Energy. It trades about 0.0 of its potential returns per unit of risk. KLX Energy Services is currently generating about -0.01 per unit of risk. If you would invest 667.00 in Oil States International on August 31, 2024 and sell it today you would lose (111.00) from holding Oil States International or give up 16.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Oil States International vs. KLX Energy Services
Performance |
| Timeline |
| Oil States International |
| KLX Energy Services |
Oil States and KLX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and KLX Energy
The main advantage of trading using opposite Oil States and KLX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States position performs unexpectedly, KLX 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 KLX Energy will offset losses from the drop in KLX Energy's long position.| Oil States vs. Now Inc | Oil States vs. Enerflex | Oil States vs. Bristow Group | Oil States vs. Helix Energy Solutions |
| KLX Energy vs. Enservco Co | KLX Energy vs. RPC Inc | KLX Energy vs. ProPetro Holding Corp | KLX Energy vs. Ranger Energy Services |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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