Correlation Between Schlumberger and Now
Can any of the company-specific risk be diversified away by investing in both Schlumberger and Now 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 Schlumberger and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger NV and Now Inc, you can compare the effects of market volatilities on Schlumberger and Now 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 Schlumberger with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and Now.
Diversification Opportunities for Schlumberger and Now
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Schlumberger and Now is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger NV and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Schlumberger 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 Schlumberger NV are associated (or correlated) with Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Schlumberger i.e., Schlumberger and Now go up and down completely randomly.
Pair Corralation between Schlumberger and Now
Considering the 90-day investment horizon Schlumberger is expected to generate 3.52 times less return on investment than Now. But when comparing it to its historical volatility, Schlumberger NV is 1.25 times less risky than Now. It trades about 0.06 of its potential returns per unit of risk. Now Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,293 in Now Inc on August 30, 2024 and sell it today you would earn a total of 220.00 from holding Now Inc or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schlumberger NV vs. Now Inc
Performance |
| Timeline |
| Schlumberger NV |
| Now Inc |
Schlumberger and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schlumberger and Now
The main advantage of trading using opposite Schlumberger and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger position performs unexpectedly, Now 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 Now will offset losses from the drop in Now's long position.| Schlumberger vs. Baker Hughes Co | Schlumberger vs. NOV Inc | Schlumberger vs. Weatherford International PLC | Schlumberger vs. Tenaris SA ADR |
| Now vs. DXP Enterprises | Now vs. Watsco Inc | Now vs. Distribution Solutions Group | Now vs. SiteOne Landscape Supply |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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