Correlation Between Calfrac Well and Worley Parsons

Can any of the company-specific risk be diversified away by investing in both Calfrac Well and Worley Parsons 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 Worley Parsons 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 Worley Parsons, you can compare the effects of market volatilities on Calfrac Well and Worley Parsons 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 Worley Parsons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calfrac Well and Worley Parsons.

Diversification Opportunities for Calfrac Well and Worley Parsons

0.6

Correlation Coefficient

Calfrac Well  Worley Parsons

Poor diversification

The 3 months correlation between Calfrac and Worley is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Calfrac Well Services and Worley Parsons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley Parsons 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 Worley Parsons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley Parsons has no effect on the direction of Calfrac Well i.e., Calfrac Well and Worley Parsons go up and down completely randomly.

Pair Corralation between Calfrac Well and Worley Parsons

Assuming the 90 days horizon Calfrac Well Services is expected to generate 0.72 times more return on investment than Worley Parsons. However, Calfrac Well Services is 1.4 times less risky than Worley Parsons. It trades about 0.06 of its potential returns per unit of risk. Worley Parsons is currently generating about -0.1 per unit of risk. If you would invest  281.00  in Calfrac Well Services on September 27, 2024 and sell it today you would earn a total of  9.00  from holding Calfrac Well Services or generate 3.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Calfrac Well Services  vs.  Worley Parsons

Calfrac Well Services

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Calfrac Well Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Calfrac Well is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Worley Parsons

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worley Parsons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Calfrac Well and Worley Parsons

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

The idea behind Calfrac Well Services and Worley Parsons 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.