Correlation Between Weatherford International and Geospace Technologies
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Geospace Technologies 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 Geospace Technologies 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 Geospace Technologies, you can compare the effects of market volatilities on Weatherford International and Geospace Technologies 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 Geospace Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Geospace Technologies.
Diversification Opportunities for Weatherford International and Geospace Technologies
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weatherford and Geospace is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies 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 Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of Weatherford International i.e., Weatherford International and Geospace Technologies go up and down completely randomly.
Pair Corralation between Weatherford International and Geospace Technologies
Given the investment horizon of 90 days Weatherford International PLC is expected to generate 0.53 times more return on investment than Geospace Technologies. However, Weatherford International PLC is 1.88 times less risky than Geospace Technologies. It trades about 0.1 of its potential returns per unit of risk. Geospace Technologies is currently generating about -0.02 per unit of risk. If you would invest 7,976 in Weatherford International PLC on August 28, 2024 and sell it today you would earn a total of 462.00 from holding Weatherford International PLC or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Geospace Technologies
Performance |
| Timeline |
| Weatherford International |
| Geospace Technologies |
Weatherford International and Geospace Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Geospace Technologies
The main advantage of trading using opposite Weatherford International and Geospace Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Geospace Technologies 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 Geospace Technologies will offset losses from the drop in Geospace Technologies' long position.| Weatherford International vs. ProPetro Holding Corp | Weatherford International vs. RPC Inc | Weatherford International vs. MRC Global | Weatherford International vs. Expro Group Holdings |
| Geospace Technologies vs. Enerflex | Geospace Technologies vs. Oil States International | Geospace Technologies vs. Newpark Resources | Geospace Technologies vs. MRC Global |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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