Correlation Between MRC Global and Core Laboratories

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

By analyzing existing cross correlation between MRC Global and Core Laboratories NV, you can compare the effects of market volatilities on MRC Global and Core Laboratories 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 MRC Global with a short position of Core Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and Core Laboratories.

Diversification Opportunities for MRC Global and Core Laboratories

0.83

Correlation Coefficient

MRC Global  Core Laboratories

Very poor diversification

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

Pair Corralation between MRC Global and Core Laboratories

Considering the 90-day investment horizon MRC Global is expected to generate 0.89 times more return on investment than Core Laboratories. However, MRC Global is 1.13 times less risky than Core Laboratories. It trades about -0.03 of its potential returns per unit of risk. Core Laboratories NV is currently generating about -0.04 per unit of risk. If you would invest  1,289  in MRC Global on December 26, 2024 and sell it today you would lose (78.00) from holding MRC Global or give up 6.05% of portfolio value over 90 days.

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

MRC Global  vs.  Core Laboratories NV

MRC Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRC Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MRC Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Core Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MRC Global and Core Laboratories

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

The idea behind MRC Global and Core Laboratories NV 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.