Correlation Between Superior Drilling and Nextier Oilfield
Can any of the company-specific risk be diversified away by investing in both Superior Drilling and Nextier Oilfield 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 Superior Drilling and Nextier Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Drilling Products and Nextier Oilfield Solutions, you can compare the effects of market volatilities on Superior Drilling and Nextier Oilfield 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 Superior Drilling with a short position of Nextier Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Drilling and Nextier Oilfield.
Diversification Opportunities for Superior Drilling and Nextier Oilfield
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and Nextier is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Superior Drilling Products and Nextier Oilfield Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextier Oilfield Sol and Superior Drilling 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 Superior Drilling Products are associated (or correlated) with Nextier Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextier Oilfield Sol has no effect on the direction of Superior Drilling i.e., Superior Drilling and Nextier Oilfield go up and down completely randomly.
Pair Corralation between Superior Drilling and Nextier Oilfield
Given the investment horizon of 90 days Superior Drilling Products is expected to under-perform the Nextier Oilfield. In addition to that, Superior Drilling is 2.09 times more volatile than Nextier Oilfield Solutions. It trades about -0.04 of its total potential returns per unit of risk. Nextier Oilfield Solutions is currently generating about 0.26 per unit of volatility. If you would invest 864.00 in Nextier Oilfield Solutions on August 31, 2024 and sell it today you would earn a total of 271.00 from holding Nextier Oilfield Solutions or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 11.03% |
| Values | Daily Returns |
Superior Drilling Products vs. Nextier Oilfield Solutions
Performance |
| Timeline |
| Superior Drilling |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Superior Drilling and Nextier Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Drilling and Nextier Oilfield
The main advantage of trading using opposite Superior Drilling and Nextier Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Drilling position performs unexpectedly, Nextier Oilfield 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 Nextier Oilfield will offset losses from the drop in Nextier Oilfield's long position.| Superior Drilling vs. Geospace Technologies | Superior Drilling vs. Enerflex | Superior Drilling vs. MRC Global | Superior Drilling vs. Now Inc |
| Nextier Oilfield vs. ProPetro Holding Corp | Nextier Oilfield vs. Select Energy Services | Nextier Oilfield vs. Liberty Oilfield Services | Nextier Oilfield vs. Cactus Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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