Correlation Between National Energy and Bristow

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

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

Diversification Opportunities for National Energy and Bristow

0.72

Correlation Coefficient

National Energy  Bristow

Poor diversification

The 3 months correlation between National and Bristow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding National 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 National 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 National 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 National Energy i.e., National Energy and Bristow go up and down completely randomly.

Pair Corralation between National Energy and Bristow

Given the investment horizon of 90 days National Energy Services is expected to under-perform the Bristow. In addition to that, National Energy is 1.02 times more volatile than Bristow Group. It trades about -0.07 of its total potential returns per unit of risk. Bristow Group is currently generating about -0.01 per unit of volatility. If you would invest  3,360  in Bristow Group on December 29, 2024 and sell it today you would lose (105.00) from holding Bristow Group or give up 3.13% of portfolio value over 90 days.

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

National Energy Services  vs.  Bristow Group

National Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Bristow Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with National Energy and Bristow

The main advantage of trading using opposite National Energy and Bristow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National 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 National 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.