Correlation Between Liberty Oilfield and Helix Energy

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

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

Diversification Opportunities for Liberty Oilfield and Helix Energy

0.44

Correlation Coefficient

Liberty Oilfield  Helix Energy

Very weak diversification

The 3 months correlation between Liberty and Helix is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and Helix Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helix Energy Solutions and Liberty Oilfield 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 Liberty Oilfield Services are associated (or correlated) with Helix Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helix Energy Solutions has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and Helix Energy go up and down completely randomly.

Pair Corralation between Liberty Oilfield and Helix Energy

Given the investment horizon of 90 days Liberty Oilfield Services is expected to under-perform the Helix Energy. In addition to that, Liberty Oilfield is 1.14 times more volatile than Helix Energy Solutions. It trades about -0.01 of its total potential returns per unit of risk. Helix Energy Solutions is currently generating about 0.04 per unit of volatility. If you would invest  1,028  in Helix Energy Solutions on September 4, 2024 and sell it today you would earn a total of  44.00  from holding Helix Energy Solutions or generate 4.28% return on investment over 90 days.

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

Liberty Oilfield Services  vs.  Helix Energy Solutions

Liberty Oilfield Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

Helix Energy Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helix Energy Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Helix Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Liberty Oilfield and Helix Energy

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

The idea behind Liberty Oilfield Services and Helix Energy Solutions 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.