Correlation Between Civeo Corp and Target Hospitality

Can any of the company-specific risk be diversified away by investing in both Civeo Corp and Target Hospitality 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 Civeo Corp and Target Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Civeo Corp and Target Hospitality Corp, you can compare the effects of market volatilities on Civeo Corp and Target Hospitality 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 Civeo Corp with a short position of Target Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Civeo Corp and Target Hospitality.

Diversification Opportunities for Civeo Corp and Target Hospitality

-0.22

Correlation Coefficient

Civeo Corp  Target Hospitality

Very good diversification

The 3 months correlation between Civeo and Target is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Civeo Corp and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp and Civeo Corp 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 Civeo Corp are associated (or correlated) with Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of Civeo Corp i.e., Civeo Corp and Target Hospitality go up and down completely randomly.

Pair Corralation between Civeo Corp and Target Hospitality

Given the investment horizon of 90 days Civeo Corp is expected to generate 0.27 times more return on investment than Target Hospitality. However, Civeo Corp is 3.75 times less risky than Target Hospitality. It trades about 0.15 of its potential returns per unit of risk. Target Hospitality Corp is currently generating about -0.06 per unit of risk. If you would invest  2,317  in Civeo Corp on November 29, 2024 and sell it today you would earn a total of  380.00  from holding Civeo Corp or generate 16.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Civeo Corp  vs.  Target Hospitality Corp

Civeo Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Civeo Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Civeo Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Target Hospitality Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Hospitality Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Civeo Corp and Target Hospitality

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

The idea behind Civeo Corp and Target Hospitality Corp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.