Correlation Between Key Energy and Boomer Holdings

Can any of the company-specific risk be diversified away by investing in both Key Energy and Boomer Holdings 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 Key Energy and Boomer Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Key Energy and Boomer Holdings

0.0

Correlation Coefficient

Key Energy  Boomer Holdings

Pay attention - limited upside

The 3 months correlation between Key and Boomer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Key Energy Services and Boomer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boomer Holdings and Key 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 Key Energy Services are associated (or correlated) with Boomer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boomer Holdings has no effect on the direction of Key Energy i.e., Key Energy and Boomer Holdings go up and down completely randomly.

Pair Corralation between Key Energy and Boomer Holdings

If you would invest  0.04  in Boomer Holdings on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Boomer Holdings or generate 0.0% return on investment over 90 days.

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

Key Energy Services  vs.  Boomer Holdings

Key Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Boomer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boomer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Boomer Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Key Energy and Boomer Holdings

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

The idea behind Key Energy Services and Boomer Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.