Correlation Between Cactus and Tidewater
Can any of the company-specific risk be diversified away by investing in both Cactus and Tidewater 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 Tidewater into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cactus Inc and Tidewater, you can compare the effects of market volatilities on Cactus and Tidewater 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 Tidewater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cactus and Tidewater.
Diversification Opportunities for Cactus and Tidewater
Good diversification
The 3 months correlation between Cactus and Tidewater is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Tidewater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater 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 Tidewater. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidewater has no effect on the direction of Cactus i.e., Cactus and Tidewater go up and down completely randomly.
Pair Corralation between Cactus and Tidewater
Considering the 90-day investment horizon Cactus Inc is expected to generate 0.93 times more return on investment than Tidewater. However, Cactus Inc is 1.07 times less risky than Tidewater. It trades about 0.05 of its potential returns per unit of risk. Tidewater is currently generating about -0.01 per unit of risk. If you would invest 5,950 in Cactus Inc on November 2, 2024 and sell it today you would earn a total of 89.00 from holding Cactus Inc or generate 1.5% 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. Tidewater
Performance |
| Timeline |
| Cactus Inc |
| Tidewater |
Cactus and Tidewater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cactus and Tidewater
The main advantage of trading using opposite Cactus and Tidewater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cactus position performs unexpectedly, Tidewater 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 Tidewater will offset losses from the drop in Tidewater's long position.| Cactus vs. ChampionX | Cactus vs. Expro Group Holdings | Cactus vs. Ranger Energy Services | Cactus vs. MRC Global |
| Tidewater vs. Weatherford International PLC | Tidewater vs. NOV Inc | Tidewater vs. Liberty Oilfield Services | Tidewater vs. TechnipFMC PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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