Correlation Between Weatherford International and First Internet
Can any of the company-specific risk be diversified away by investing in both Weatherford International and First Internet 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 First Internet 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 First Internet Bancorp, you can compare the effects of market volatilities on Weatherford International and First Internet 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 First Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and First Internet.
Diversification Opportunities for Weatherford International and First Internet
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weatherford and First is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and First Internet Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Internet Bancorp 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 First Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Internet Bancorp has no effect on the direction of Weatherford International i.e., Weatherford International and First Internet go up and down completely randomly.
Pair Corralation between Weatherford International and First Internet
Given the investment horizon of 90 days Weatherford International PLC is expected to generate 8.09 times more return on investment than First Internet. However, Weatherford International is 8.09 times more volatile than First Internet Bancorp. It trades about 0.08 of its potential returns per unit of risk. First Internet Bancorp is currently generating about 0.28 per unit of risk. If you would invest 7,876 in Weatherford International PLC on September 1, 2024 and sell it today you would earn a total of 354.00 from holding Weatherford International PLC or generate 4.49% 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. First Internet Bancorp
Performance |
| Timeline |
| Weatherford International |
| First Internet Bancorp |
Weatherford International and First Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and First Internet
The main advantage of trading using opposite Weatherford International and First Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, First Internet 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 First Internet will offset losses from the drop in First Internet's long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
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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