Correlation Between Weatherford International and Liberty Oilfield
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Liberty Oilfield 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 Liberty Oilfield 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 Liberty Oilfield Services, you can compare the effects of market volatilities on Weatherford International and Liberty Oilfield 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 Liberty Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Liberty Oilfield.
Diversification Opportunities for Weatherford International and Liberty Oilfield
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weatherford and Liberty is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Liberty Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Oilfield Services 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 Liberty Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Oilfield Services has no effect on the direction of Weatherford International i.e., Weatherford International and Liberty Oilfield go up and down completely randomly.
Pair Corralation between Weatherford International and Liberty Oilfield
Given the investment horizon of 90 days Weatherford International is expected to generate 1.16 times less return on investment than Liberty Oilfield. But when comparing it to its historical volatility, Weatherford International PLC is 1.07 times less risky than Liberty Oilfield. It trades about 0.1 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,754 in Liberty Oilfield Services on August 28, 2024 and sell it today you would earn a total of 118.00 from holding Liberty Oilfield Services or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Liberty Oilfield Services
Performance |
| Timeline |
| Weatherford International |
| Liberty Oilfield Services |
Weatherford International and Liberty Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Liberty Oilfield
The main advantage of trading using opposite Weatherford International and Liberty Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Liberty Oilfield 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 Liberty Oilfield will offset losses from the drop in Liberty Oilfield's long position.| Weatherford International vs. ProPetro Holding Corp | Weatherford International vs. RPC Inc | Weatherford International vs. MRC Global | Weatherford International vs. Expro Group Holdings |
| Liberty Oilfield vs. Ranger Energy Services | Liberty Oilfield vs. ProFrac Holding Corp | Liberty Oilfield vs. Archrock | Liberty Oilfield 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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