Correlation Between Kodiak Gas and Weatherford International

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

Diversification Opportunities for Kodiak Gas and Weatherford International

0.71

Correlation Coefficient

Kodiak Gas  Weatherford International

Poor diversification

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

Pair Corralation between Kodiak Gas and Weatherford International

Considering the 90-day investment horizon Kodiak Gas Services, is expected to generate 1.24 times more return on investment than Weatherford International. However, Kodiak Gas is 1.24 times more volatile than Weatherford International PLC. It trades about -0.01 of its potential returns per unit of risk. Weatherford International PLC is currently generating about -0.13 per unit of risk. If you would invest  4,055  in Kodiak Gas Services, on December 30, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Kodiak Gas Services,  vs.  Weatherford International PLC

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Weatherford International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weatherford International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Kodiak Gas and Weatherford International

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

The idea behind Kodiak Gas Services, and Weatherford International PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.