Correlation Between Cactus and Liberty Oilfield
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and Liberty Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Liberty Oilfield Services, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of Liberty Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Liberty Oilfield.
Diversification Opportunities for Cactus and Liberty Oilfield
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cactus and Liberty is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc 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 Cactus 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 Cactus Inc 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 Cactus i.e., Cactus and Liberty Oilfield go up and down completely randomly.
Pair Corralation between Cactus and Liberty Oilfield
Considering the 90-day investment horizon Cactus Inc is expected to generate 0.94 times more return on investment than Liberty Oilfield. However, Cactus Inc is 1.06 times less risky than Liberty Oilfield. It trades about 0.04 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about 0.03 per unit of risk. If you would invest 4,967 in Cactus Inc on August 28, 2024 and sell it today you would earn a total of 1,982 from holding Cactus Inc or generate 39.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Liberty Oilfield Services
Performance |
| Timeline |
| Cactus Inc |
| Liberty Oilfield Services |
Cactus and Liberty Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Liberty Oilfield
The main advantage of trading using opposite Cactus and Liberty Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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