Correlation Between Calfrac Well and Texas Gulf

Can any of the company-specific risk be diversified away by investing in both Calfrac Well and Texas Gulf 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 Calfrac Well and Texas Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Calfrac Well Services and Texas Gulf Energy, you can compare the effects of market volatilities on Calfrac Well and Texas Gulf 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 Calfrac Well with a short position of Texas Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calfrac Well and Texas Gulf.

Diversification Opportunities for Calfrac Well and Texas Gulf

0.28

Correlation Coefficient

Calfrac Well  Texas Gulf

Modest diversification

The 3 months correlation between Calfrac and Texas is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Texas Gulf Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Gulf Energy and Calfrac Well 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 Calfrac Well Services are associated (or correlated) with Texas Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Gulf Energy has no effect on the direction of Calfrac Well i.e., Calfrac Well and Texas Gulf go up and down completely randomly.

Pair Corralation between Calfrac Well and Texas Gulf

Assuming the 90 days horizon Calfrac Well Services is expected to under-perform the Texas Gulf. In addition to that, Calfrac Well is 2.04 times more volatile than Texas Gulf Energy. It trades about -0.03 of its total potential returns per unit of risk. Texas Gulf Energy is currently generating about 0.09 per unit of volatility. If you would invest  264,669  in Texas Gulf Energy on October 15, 2024 and sell it today you would earn a total of  7,905  from holding Texas Gulf Energy or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Calfrac Well Services  vs.  Texas Gulf Energy

Calfrac Well Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calfrac Well Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Calfrac Well is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Texas Gulf Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Texas Gulf Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Texas Gulf is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Calfrac Well and Texas Gulf

The main advantage of trading using opposite Calfrac Well and Texas Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Calfrac Well position performs unexpectedly, Texas Gulf 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 Texas Gulf will offset losses from the drop in Texas Gulf's long position.

The idea behind Calfrac Well Services and Texas Gulf Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..