Correlation Between Oil States and KLX Energy

Specify exactly 2 symbols:
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

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Oil and KLX is 0.85. 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 0.67 times more return on investment than KLX Energy. However, Oil States International is 1.48 times less risky than KLX Energy. It trades about -0.01 of its potential returns per unit of risk. KLX Energy Services is currently generating about -0.02 per unit of risk. If you would invest  782.00  in Oil States International on November 1, 2024 and sell it today you would lose (257.00) from holding Oil States International or give up 32.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Oil States International  vs.  KLX Energy Services

 Performance 
       Timeline  
Oil States International 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Oil States International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Oil States unveiled solid returns over the last few months and may actually be approaching a breakup point.
KLX Energy Services 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in KLX Energy Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, KLX Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.
The idea behind Oil States International and KLX Energy Services 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.
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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

CEOs Directory
Screen CEOs from public companies around the world
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Global Correlations
Find global opportunities by holding instruments from different markets