Correlation Between Select Energy and Cabot
Can any of the company-specific risk be diversified away by investing in both Select Energy and Cabot 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 Select Energy and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Energy Services and Cabot, you can compare the effects of market volatilities on Select Energy and Cabot 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 Select Energy with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Energy and Cabot.
Diversification Opportunities for Select Energy and Cabot
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Select and Cabot is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Select Energy 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 Select Energy Services are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Select Energy i.e., Select Energy and Cabot go up and down completely randomly.
Pair Corralation between Select Energy and Cabot
Given the investment horizon of 90 days Select Energy Services is expected to generate 2.64 times more return on investment than Cabot. However, Select Energy is 2.64 times more volatile than Cabot. It trades about 0.26 of its potential returns per unit of risk. Cabot is currently generating about 0.07 per unit of risk. If you would invest 1,072 in Select Energy Services on August 28, 2024 and sell it today you would earn a total of 374.00 from holding Select Energy Services or generate 34.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Energy Services vs. Cabot
Performance |
| Timeline |
| Select Energy Services |
| Cabot |
Select Energy and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Energy and Cabot
The main advantage of trading using opposite Select Energy and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.| Select Energy vs. ProPetro Holding Corp | Select Energy vs. RPC Inc | Select Energy vs. MRC Global | Select Energy vs. Expro Group Holdings |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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