Correlation Between Nine Energy and Invesco SP

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

By analyzing existing cross correlation between Nine Energy Service and Invesco SP Spin Off, you can compare the effects of market volatilities on Nine Energy and Invesco SP 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 Nine Energy with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and Invesco SP.

Diversification Opportunities for Nine Energy and Invesco SP

0.53

Correlation Coefficient

Nine Energy  Invesco SP

Very weak diversification

The 3 months correlation between Nine and Invesco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and Invesco SP Spin Off in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Spin and Nine 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 Nine Energy Service are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP Spin has no effect on the direction of Nine Energy i.e., Nine Energy and Invesco SP go up and down completely randomly.

Pair Corralation between Nine Energy and Invesco SP

Given the investment horizon of 90 days Nine Energy Service is expected to under-perform the Invesco SP. In addition to that, Nine Energy is 4.72 times more volatile than Invesco SP Spin Off. It trades about -0.04 of its total potential returns per unit of risk. Invesco SP Spin Off is currently generating about 0.09 per unit of volatility. If you would invest  5,318  in Invesco SP Spin Off on September 5, 2024 and sell it today you would earn a total of  3,520  from holding Invesco SP Spin Off or generate 66.19% return on investment over 90 days.

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

Nine Energy Service  vs.  Invesco SP Spin Off

Nine Energy Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Invesco SP Spin

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP Spin Off are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Invesco SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nine Energy and Invesco SP

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

The idea behind Nine Energy Service and Invesco SP Spin Off 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 CEOs Directory module to screen CEOs from public companies around the world.