Correlation Between Weatherford International and Now
Can any of the company-specific risk be diversified away by investing in both Weatherford International 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 Weatherford International and Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and Now Inc, you can compare the effects of market volatilities on Weatherford International 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 Weatherford International with a short position of Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Now.
Diversification Opportunities for Weatherford International and Now
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weatherford and Now is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc and Weatherford International 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 Weatherford International PLC 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 Weatherford International i.e., Weatherford International and Now go up and down completely randomly.
Pair Corralation between Weatherford International and Now
Given the investment horizon of 90 days Weatherford International is expected to generate 24.13 times less return on investment than Now. In addition to that, Weatherford International is 1.06 times more volatile than Now Inc. It trades about 0.0 of its total potential returns per unit of risk. Now Inc is currently generating about 0.08 per unit of volatility. If you would invest 982.00 in Now Inc on August 24, 2024 and sell it today you would earn a total of 489.00 from holding Now Inc or generate 49.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Now Inc
Performance |
| Timeline |
| Weatherford International |
| Now Inc |
Weatherford International and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Now
The main advantage of trading using opposite Weatherford International and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International 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.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now 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 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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