Correlation Between Ranger Energy and NOV

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

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

Diversification Opportunities for Ranger Energy and NOV

0.47

Correlation Coefficient

Ranger Energy  NOV

Very weak diversification

The 3 months correlation between Ranger and NOV is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Energy Services and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc and Ranger 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 Ranger Energy Services are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Ranger Energy i.e., Ranger Energy and NOV go up and down completely randomly.

Pair Corralation between Ranger Energy and NOV

Given the investment horizon of 90 days Ranger Energy is expected to generate 2.77 times less return on investment than NOV. But when comparing it to its historical volatility, Ranger Energy Services is 1.08 times less risky than NOV. It trades about 0.02 of its potential returns per unit of risk. NOV Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,439  in NOV Inc on December 27, 2024 and sell it today you would earn a total of  99.00  from holding NOV Inc or generate 6.88% return on investment over 90 days.

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

Ranger Energy Services  vs.  NOV Inc

Ranger Energy Services

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Ranger Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Ranger Energy and NOV

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

The idea behind Ranger Energy Services and NOV Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.