Correlation Between Nextier Oilfield and Enservco

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

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

Diversification Opportunities for Nextier Oilfield and Enservco

-0.25

Correlation Coefficient

Nextier Oilfield  Enservco

Very good diversification

The 3 months correlation between Nextier and Enservco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions and Enservco Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enservco and Nextier 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 Nextier Oilfield Solutions are associated (or correlated) with Enservco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enservco has no effect on the direction of Nextier Oilfield i.e., Nextier Oilfield and Enservco go up and down completely randomly.

Pair Corralation between Nextier Oilfield and Enservco

Considering the 90-day investment horizon Nextier Oilfield Solutions is expected to generate 0.53 times more return on investment than Enservco. However, Nextier Oilfield Solutions is 1.88 times less risky than Enservco. It trades about 0.06 of its potential returns per unit of risk. Enservco Co is currently generating about -0.07 per unit of risk. If you would invest  919.00  in Nextier Oilfield Solutions on September 19, 2024 and sell it today you would earn a total of  216.00  from holding Nextier Oilfield Solutions or generate 23.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.34%
Values	Daily Returns

Nextier Oilfield Solutions  vs.  Enservco Co

Nextier Oilfield Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextier Oilfield Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nextier Oilfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Enservco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enservco Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nextier Oilfield and Enservco

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

The idea behind Nextier Oilfield Solutions and Enservco Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.