Correlation Between NOV and Archrock

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

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

Diversification Opportunities for NOV and Archrock

0.43

Correlation Coefficient

NOV  Archrock

Very weak diversification

The 3 months correlation between NOV and Archrock is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and NOV 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 NOV Inc are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of NOV i.e., NOV and Archrock go up and down completely randomly.

Pair Corralation between NOV and Archrock

Considering the 90-day investment horizon NOV Inc is expected to under-perform the Archrock. But the stock apears to be less risky and, when comparing its historical volatility, NOV Inc is 1.01 times less risky than Archrock. The stock trades about -0.01 of its potential returns per unit of risk. The Archrock is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  891.00  in Archrock on December 4, 2024 and sell it today you would earn a total of  1,581  from holding Archrock or generate 177.44% return on investment over 90 days.

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

NOV Inc  vs.  Archrock

NOV Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Archrock

Risk-Adjusted Performance

Weak

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

Pair Trading with NOV and Archrock

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

The idea behind NOV Inc and Archrock 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.