Correlation Between Innovex International, and Core Laboratories

Can any of the company-specific risk be diversified away by investing in both Innovex International, and Core Laboratories 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 Innovex International, and Core Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovex International, and Core Laboratories NV, you can compare the effects of market volatilities on Innovex International, and Core Laboratories 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 Innovex International, with a short position of Core Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovex International, and Core Laboratories.

Diversification Opportunities for Innovex International, and Core Laboratories

0.71

Correlation Coefficient

Innovex International,  Core Laboratories

Poor diversification

The 3 months correlation between Innovex and Core is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Innovex International, and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories and Innovex International, 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 Innovex International, are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Innovex International, i.e., Innovex International, and Core Laboratories go up and down completely randomly.

Pair Corralation between Innovex International, and Core Laboratories

Given the investment horizon of 90 days Innovex International, is expected to generate 1.2 times more return on investment than Core Laboratories. However, Innovex International, is 1.2 times more volatile than Core Laboratories NV. It trades about -0.06 of its potential returns per unit of risk. Core Laboratories NV is currently generating about -0.09 per unit of risk. If you would invest  1,563  in Innovex International, on October 6, 2024 and sell it today you would lose (75.00) from holding Innovex International, or give up 4.8% of portfolio value over 90 days.

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

Innovex International,  vs.  Core Laboratories NV

Innovex International,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovex International, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Innovex International, is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Core Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Core Laboratories is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Innovex International, and Core Laboratories

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

The idea behind Innovex International, and Core Laboratories NV 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.