Correlation Between Oil States and EVI Industries

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

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

Diversification Opportunities for Oil States and EVI Industries

-0.02

Correlation Coefficient

Oil States  EVI Industries

Good diversification

The 3 months correlation between Oil and EVI is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and EVI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVI Industries and Oil States 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 Oil States International are associated (or correlated) with EVI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVI Industries has no effect on the direction of Oil States i.e., Oil States and EVI Industries go up and down completely randomly.

Pair Corralation between Oil States and EVI Industries

Considering the 90-day investment horizon Oil States International is expected to generate 0.93 times more return on investment than EVI Industries. However, Oil States International is 1.08 times less risky than EVI Industries. It trades about 0.09 of its potential returns per unit of risk. EVI Industries is currently generating about 0.03 per unit of risk. If you would invest  483.00  in Oil States International on December 25, 2024 and sell it today you would earn a total of  65.00  from holding Oil States International or generate 13.46% return on investment over 90 days.

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

Oil States International  vs.  EVI Industries

Oil States International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oil States International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Oil States unveiled solid returns over the last few months and may actually be approaching a breakup point.

EVI Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EVI Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, EVI Industries is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Oil States and EVI Industries

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

The idea behind Oil States International and EVI Industries 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.