Correlation Between Oil States and MRC Global
Can any of the company-specific risk be diversified away by investing in both Oil States and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on Oil States and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and MRC Global.
Diversification Opportunities for Oil States and MRC Global
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oil and MRC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Oil States i.e., Oil States and MRC Global go up and down completely randomly.
Pair Corralation between Oil States and MRC Global
Considering the 90-day investment horizon Oil States International is expected to generate 1.1 times more return on investment than MRC Global. However, Oil States is 1.1 times more volatile than MRC Global. It trades about 0.3 of its potential returns per unit of risk. MRC Global is currently generating about 0.2 per unit of risk. If you would invest 435.00 in Oil States International on August 27, 2024 and sell it today you would earn a total of 116.00 from holding Oil States International or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. MRC Global
Performance |
| Timeline |
| Oil States International |
| MRC Global |
Oil States and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and MRC Global
The main advantage of trading using opposite Oil States and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Oil States vs. ProPetro Holding Corp | Oil States vs. RPC Inc | Oil States vs. MRC Global | Oil States vs. Expro Group Holdings |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global vs. Geospace Technologies |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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