Correlation Between Liberty Oilfield and Oceaneering International

Can any of the company-specific risk be diversified away by investing in both Liberty Oilfield and Oceaneering 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 Liberty Oilfield and Oceaneering International 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 Oceaneering International, you can compare the effects of market volatilities on Liberty Oilfield and Oceaneering 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 Liberty Oilfield with a short position of Oceaneering International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Oilfield and Oceaneering International.

Diversification Opportunities for Liberty Oilfield and Oceaneering International

0.13

Correlation Coefficient

Liberty Oilfield  Oceaneering International

Average diversification

The 3 months correlation between Liberty and Oceaneering is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Oilfield Services and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International 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 Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Liberty Oilfield i.e., Liberty Oilfield and Oceaneering International go up and down completely randomly.

Pair Corralation between Liberty Oilfield and Oceaneering International

Given the investment horizon of 90 days Liberty Oilfield Services is expected to generate 1.02 times more return on investment than Oceaneering International. However, Liberty Oilfield is 1.02 times more volatile than Oceaneering International. It trades about 0.04 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.03 per unit of risk. If you would invest  2,032  in Liberty Oilfield Services on October 13, 2024 and sell it today you would earn a total of  108.00  from holding Liberty Oilfield Services or generate 5.31% return on investment over 90 days.

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

Liberty Oilfield Services  vs.  Oceaneering International

Liberty Oilfield Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Oilfield Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Liberty Oilfield may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Oceaneering International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Oceaneering International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Liberty Oilfield and Oceaneering International

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

The idea behind Liberty Oilfield Services and Oceaneering International 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.