Correlation Between Cactus and Oceaneering International
Can any of the company-specific risk be diversified away by investing in both Cactus and Oceaneering International 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 Oceaneering International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Oceaneering International, you can compare the effects of market volatilities on Cactus and Oceaneering International 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 Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Oceaneering International.
Diversification Opportunities for Cactus and Oceaneering International
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cactus and Oceaneering is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International 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 Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Cactus i.e., Cactus and Oceaneering International go up and down completely randomly.
Pair Corralation between Cactus and Oceaneering International
Considering the 90-day investment horizon Cactus Inc is expected to generate 0.96 times more return on investment than Oceaneering International. However, Cactus Inc is 1.04 times less risky than Oceaneering International. It trades about 0.28 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.27 per unit of risk. If you would invest 5,759 in Cactus Inc on August 27, 2024 and sell it today you would earn a total of 1,140 from holding Cactus Inc or generate 19.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cactus Inc vs. Oceaneering International
Performance |
| Timeline |
| Cactus Inc |
| Oceaneering International |
Cactus and Oceaneering International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Oceaneering International
The main advantage of trading using opposite Cactus and Oceaneering International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus position performs unexpectedly, Oceaneering International 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 Oceaneering International will offset losses from the drop in Oceaneering International's long position.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| Oceaneering International vs. Helix Energy Solutions | Oceaneering International vs. Newpark Resources | Oceaneering International vs. RPC Inc | Oceaneering International vs. Oil States International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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