Correlation Between NOV and Geospace Technologies

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

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

Diversification Opportunities for NOV and Geospace Technologies

-0.04

Correlation Coefficient

NOV  Geospace Technologies

Good diversification

The 3 months correlation between NOV and Geospace is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Geospace Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geospace Technologies 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 Geospace Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geospace Technologies has no effect on the direction of NOV i.e., NOV and Geospace Technologies go up and down completely randomly.

Pair Corralation between NOV and Geospace Technologies

Considering the 90-day investment horizon NOV Inc is expected to generate 0.87 times more return on investment than Geospace Technologies. However, NOV Inc is 1.15 times less risky than Geospace Technologies. It trades about 0.06 of its potential returns per unit of risk. Geospace Technologies is currently generating about -0.16 per unit of risk. If you would invest  1,443  in NOV Inc on December 28, 2024 and sell it today you would earn a total of  100.00  from holding NOV Inc or generate 6.93% return on investment over 90 days.

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

NOV Inc  vs.  Geospace Technologies

NOV Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, NOV may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Geospace Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Geospace Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NOV and Geospace Technologies

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

The idea behind NOV Inc and Geospace Technologies 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.