Correlation Between Bristow and USA Compression
Can any of the company-specific risk be diversified away by investing in both Bristow and USA Compression 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 USA Compression into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bristow Group and USA Compression Partners, you can compare the effects of market volatilities on Bristow and USA Compression 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 USA Compression. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristow and USA Compression.
Diversification Opportunities for Bristow and USA Compression
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bristow and USA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and USA Compression Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USA Compression Partners 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 USA Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USA Compression Partners has no effect on the direction of Bristow i.e., Bristow and USA Compression go up and down completely randomly.
Pair Corralation between Bristow and USA Compression
Given the investment horizon of 90 days Bristow is expected to generate 2.02 times less return on investment than USA Compression. In addition to that, Bristow is 1.32 times more volatile than USA Compression Partners. It trades about 0.23 of its total potential returns per unit of risk. USA Compression Partners is currently generating about 0.6 per unit of volatility. If you would invest 2,254 in USA Compression Partners on October 24, 2024 and sell it today you would earn a total of 363.00 from holding USA Compression Partners or generate 16.1% 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. USA Compression Partners
Performance |
| Timeline |
| Bristow Group |
| USA Compression Partners |
Bristow and USA Compression Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bristow and USA Compression
The main advantage of trading using opposite Bristow and USA Compression positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristow position performs unexpectedly, USA Compression 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 USA Compression will offset losses from the drop in USA Compression's long position.| Bristow vs. Oil States International | Bristow vs. Geospace Technologies | Bristow vs. Weatherford International PLC | Bristow vs. Enerflex |
| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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