Correlation Between Select Energy and Tidewater
Can any of the company-specific risk be diversified away by investing in both Select Energy 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 Select Energy and Tidewater 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 Tidewater, you can compare the effects of market volatilities on Select Energy 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 Select Energy with a short position of Tidewater. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Energy and Tidewater.
Diversification Opportunities for Select Energy and Tidewater
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Select and Tidewater is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and Tidewater in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidewater 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 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 Select Energy i.e., Select Energy and Tidewater go up and down completely randomly.
Pair Corralation between Select Energy and Tidewater
Given the investment horizon of 90 days Select Energy Services is expected to generate 0.86 times more return on investment than Tidewater. However, Select Energy Services is 1.16 times less risky than Tidewater. It trades about 0.06 of its potential returns per unit of risk. Tidewater is currently generating about 0.05 per unit of risk. If you would invest 746.00 in Select Energy Services on August 24, 2024 and sell it today you would earn a total of 723.00 from holding Select Energy Services or generate 96.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Energy Services vs. Tidewater
Performance |
| Timeline |
| Select Energy Services |
| Tidewater |
Select Energy and Tidewater Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Energy and Tidewater
The main advantage of trading using opposite Select Energy and Tidewater positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Energy 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.| Select Energy vs. Orion Engineered Carbons | Select Energy vs. Element Solutions | Select Energy vs. Kronos Worldwide | Select Energy vs. FutureFuel Corp |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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