Correlation Between Weatherford International and Profire Ene
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Profire Ene 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 Profire Ene 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 Profire Ene, you can compare the effects of market volatilities on Weatherford International and Profire Ene 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 Profire Ene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Profire Ene.
Diversification Opportunities for Weatherford International and Profire Ene
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weatherford and Profire is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Profire Ene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profire Ene 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 Profire Ene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profire Ene has no effect on the direction of Weatherford International i.e., Weatherford International and Profire Ene go up and down completely randomly.
Pair Corralation between Weatherford International and Profire Ene
Given the investment horizon of 90 days Weatherford International is expected to generate 1.97 times less return on investment than Profire Ene. But when comparing it to its historical volatility, Weatherford International PLC is 1.77 times less risky than Profire Ene. It trades about 0.06 of its potential returns per unit of risk. Profire Ene is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 105.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Profire Ene or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Weatherford International PLC vs. Profire Ene
Performance |
| Timeline |
| Weatherford International |
| Profire Ene |
Weatherford International and Profire Ene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Profire Ene
The main advantage of trading using opposite Weatherford International and Profire Ene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Profire Ene 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 Profire Ene will offset losses from the drop in Profire Ene's long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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