Correlation Between Tidewater and Core Laboratories

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

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

Diversification Opportunities for Tidewater and Core Laboratories

-0.48

Correlation Coefficient

Tidewater  Core Laboratories

Very good diversification

The 3 months correlation between Tidewater and Core is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories and Tidewater 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 Tidewater are associated (or correlated) with Core Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Laboratories has no effect on the direction of Tidewater i.e., Tidewater and Core Laboratories go up and down completely randomly.

Pair Corralation between Tidewater and Core Laboratories

Considering the 90-day investment horizon Tidewater is expected to under-perform the Core Laboratories. But the stock apears to be less risky and, when comparing its historical volatility, Tidewater is 1.08 times less risky than Core Laboratories. The stock trades about -0.23 of its potential returns per unit of risk. The Core Laboratories NV is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,877  in Core Laboratories NV on September 1, 2024 and sell it today you would earn a total of  158.00  from holding Core Laboratories NV or generate 8.42% return on investment over 90 days.

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

Tidewater  vs.  Core Laboratories NV

Tidewater

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tidewater has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Core Laboratories

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Core Laboratories NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Core Laboratories may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Tidewater and Core Laboratories

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

The idea behind Tidewater and Core Laboratories NV 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.