Correlation Between Bristow and Nine Energy
Can any of the company-specific risk be diversified away by investing in both Bristow and Nine 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 Bristow and Nine Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristow Group and Nine Energy Service, you can compare the effects of market volatilities on Bristow and Nine 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 Bristow with a short position of Nine Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristow and Nine Energy.
Diversification Opportunities for Bristow and Nine Energy
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristow and Nine is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Nine Energy Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Energy Service and Bristow 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 Bristow Group are associated (or correlated) with Nine Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Energy Service has no effect on the direction of Bristow i.e., Bristow and Nine Energy go up and down completely randomly.
Pair Corralation between Bristow and Nine Energy
Given the investment horizon of 90 days Bristow is expected to generate 2.51 times less return on investment than Nine Energy. But when comparing it to its historical volatility, Bristow Group is 4.03 times less risky than Nine Energy. It trades about 0.22 of its potential returns per unit of risk. Nine Energy Service is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 103.00 in Nine Energy Service on August 24, 2024 and sell it today you would earn a total of 23.00 from holding Nine Energy Service or generate 22.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bristow Group vs. Nine Energy Service
Performance |
| Timeline |
| Bristow Group |
| Nine Energy Service |
Bristow and Nine Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristow and Nine Energy
The main advantage of trading using opposite Bristow and Nine Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristow position performs unexpectedly, Nine 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 Nine Energy will offset losses from the drop in Nine Energy's long position.| Bristow vs. Oil States International | Bristow vs. Geospace Technologies | Bristow vs. Weatherford International PLC | Bristow vs. Enerflex |
| Nine Energy vs. Liberty Oilfield Services | Nine Energy vs. ProFrac Holding Corp | Nine Energy vs. Helix Energy Solutions | Nine Energy vs. Newpark Resources |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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