Correlation Between Oil States and Weatherford International
Can any of the company-specific risk be diversified away by investing in both Oil States and Weatherford International 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 Weatherford International 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 Weatherford International PLC, you can compare the effects of market volatilities on Oil States and Weatherford International 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 Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and Weatherford International.
Diversification Opportunities for Oil States and Weatherford International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oil and Weatherford is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and Weatherford International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International 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 Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Oil States i.e., Oil States and Weatherford International go up and down completely randomly.
Pair Corralation between Oil States and Weatherford International
Considering the 90-day investment horizon Oil States International is expected to generate 1.24 times more return on investment than Weatherford International. However, Oil States is 1.24 times more volatile than Weatherford International PLC. It trades about 0.36 of its potential returns per unit of risk. Weatherford International PLC is currently generating about 0.08 per unit of risk. If you would invest 418.00 in Oil States International on August 30, 2024 and sell it today you would earn a total of 138.00 from holding Oil States International or generate 33.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. Weatherford International PLC
Performance |
| Timeline |
| Oil States International |
| Weatherford International |
Oil States and Weatherford International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and Weatherford International
The main advantage of trading using opposite Oil States and Weatherford International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States position performs unexpectedly, Weatherford International 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 Weatherford International will offset losses from the drop in Weatherford International's long position.| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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