Correlation Between KLX Energy and Bristow

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

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

Diversification Opportunities for KLX Energy and Bristow

0.83

Correlation Coefficient

KLX Energy  Bristow

Very poor diversification

The 3 months correlation between KLX and Bristow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KLX Energy Services and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group and KLX 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 KLX Energy Services are associated (or correlated) with Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of KLX Energy i.e., KLX Energy and Bristow go up and down completely randomly.

Pair Corralation between KLX Energy and Bristow

Given the investment horizon of 90 days KLX Energy Services is expected to under-perform the Bristow. In addition to that, KLX Energy is 1.78 times more volatile than Bristow Group. It trades about -0.44 of its total potential returns per unit of risk. Bristow Group is currently generating about -0.37 per unit of volatility. If you would invest  3,829  in Bristow Group on September 23, 2024 and sell it today you would lose (568.00) from holding Bristow Group or give up 14.83% of portfolio value over 90 days.

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

KLX Energy Services  vs.  Bristow Group

KLX Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bristow Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with KLX Energy and Bristow

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

The idea behind KLX Energy Services and Bristow Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.