Correlation Between Weatherford International and Cactus
Can any of the company-specific risk be diversified away by investing in both Weatherford International and Cactus 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 Cactus 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 Cactus Inc, you can compare the effects of market volatilities on Weatherford International and Cactus 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 Cactus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and Cactus.
Diversification Opportunities for Weatherford International and Cactus
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weatherford and Cactus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Cactus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cactus Inc 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 Cactus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cactus Inc has no effect on the direction of Weatherford International i.e., Weatherford International and Cactus go up and down completely randomly.
Pair Corralation between Weatherford International and Cactus
Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the Cactus. In addition to that, Weatherford International is 1.34 times more volatile than Cactus Inc. It trades about -0.33 of its total potential returns per unit of risk. Cactus Inc is currently generating about -0.06 per unit of volatility. If you would invest 6,092 in Cactus Inc on November 4, 2024 and sell it today you would lose (121.00) from holding Cactus Inc or give up 1.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. Cactus Inc
Performance |
| Timeline |
| Weatherford International |
| Cactus Inc |
Weatherford International and Cactus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and Cactus
The main advantage of trading using opposite Weatherford International and Cactus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International position performs unexpectedly, Cactus 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 Cactus will offset losses from the drop in Cactus' long position.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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