Correlation Between Weatherford International and MRC Global
Can any of the company-specific risk be diversified away by investing in both Weatherford International and MRC Global 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 MRC Global 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 MRC Global, you can compare the effects of market volatilities on Weatherford International and MRC Global 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 MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and MRC Global.
Diversification Opportunities for Weatherford International and MRC Global
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Weatherford and MRC is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 MRC Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRC Global has no effect on the direction of Weatherford International i.e., Weatherford International and MRC Global go up and down completely randomly.
Pair Corralation between Weatherford International and MRC Global
Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the MRC Global. In addition to that, Weatherford International is 1.13 times more volatile than MRC Global. It trades about -0.05 of its total potential returns per unit of risk. MRC Global is currently generating about 0.1 per unit of volatility. If you would invest 1,256 in MRC Global on August 25, 2024 and sell it today you would earn a total of 143.00 from holding MRC Global or generate 11.39% 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. MRC Global
Performance |
| Timeline |
| Weatherford International |
| MRC Global |
Weatherford International and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and MRC Global
The main advantage of trading using opposite Weatherford International and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, MRC Global 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 MRC Global will offset losses from the drop in MRC Global's long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| MRC Global vs. NOV Inc | MRC Global vs. Ranger Energy Services | MRC Global vs. Oil States International | MRC Global 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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