Correlation Between Kodiak Gas and National Energy

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

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

Diversification Opportunities for Kodiak Gas and National Energy

0.88

Correlation Coefficient

Kodiak Gas  National Energy

Very poor diversification

The 3 months correlation between Kodiak and National is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Gas Services, and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Energy Services and Kodiak Gas 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 Kodiak Gas Services, are associated (or correlated) with National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Kodiak Gas i.e., Kodiak Gas and National Energy go up and down completely randomly.

Pair Corralation between Kodiak Gas and National Energy

Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 1.61 times more return on investment than National Energy. However, Kodiak Gas is 1.61 times more volatile than National Energy Services. It trades about -0.01 of its potential returns per unit of risk. National Energy Services is currently generating about -0.07 per unit of risk. If you would invest  4,055  in Kodiak Gas Services, on December 29, 2024 and sell it today you would lose (294.00) from holding Kodiak Gas Services, or give up 7.25% of portfolio value over 90 days.

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

Kodiak Gas Services,  vs.  National Energy Services

Kodiak Gas Services,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kodiak Gas Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Kodiak Gas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

National Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Kodiak Gas and National Energy

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

The idea behind Kodiak Gas Services, and National Energy Services 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.