Correlation Between Cactus and MRC Global
Can any of the company-specific risk be diversified away by investing in both Cactus 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 Cactus and MRC Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and MRC Global, you can compare the effects of market volatilities on Cactus 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 Cactus with a short position of MRC Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and MRC Global.
Diversification Opportunities for Cactus and MRC Global
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cactus and MRC is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and MRC Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRC Global 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 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 Cactus i.e., Cactus and MRC Global go up and down completely randomly.
Pair Corralation between Cactus and MRC Global
Considering the 90-day investment horizon Cactus Inc is expected to under-perform the MRC Global. But the stock apears to be less risky and, when comparing its historical volatility, Cactus Inc is 1.16 times less risky than MRC Global. The stock trades about -0.06 of its potential returns per unit of risk. The MRC Global is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,330 in MRC Global on November 4, 2024 and sell it today you would earn a total of 138.00 from holding MRC Global or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. MRC Global
Performance |
| Timeline |
| Cactus Inc |
| MRC Global |
Cactus and MRC Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and MRC Global
The main advantage of trading using opposite Cactus and MRC Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus 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.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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