Correlation Between Target Hospitality and Civeo Corp

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

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

Diversification Opportunities for Target Hospitality and Civeo Corp

-0.73

Correlation Coefficient

Target Hospitality  Civeo Corp

Pay attention - limited upside

The 3 months correlation between Target and Civeo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Target Hospitality Corp and Civeo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Civeo Corp and Target Hospitality 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 Target Hospitality Corp are associated (or correlated) with Civeo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Civeo Corp has no effect on the direction of Target Hospitality i.e., Target Hospitality and Civeo Corp go up and down completely randomly.

Pair Corralation between Target Hospitality and Civeo Corp

Allowing for the 90-day total investment horizon Target Hospitality Corp is expected to under-perform the Civeo Corp. In addition to that, Target Hospitality is 1.44 times more volatile than Civeo Corp. It trades about -0.02 of its total potential returns per unit of risk. Civeo Corp is currently generating about -0.01 per unit of volatility. If you would invest  3,106  in Civeo Corp on October 4, 2024 and sell it today you would lose (846.00) from holding Civeo Corp or give up 27.24% of portfolio value over 90 days.

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

Target Hospitality Corp  vs.  Civeo Corp

Target Hospitality Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Target Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Target Hospitality and Civeo Corp

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

The idea behind Target Hospitality Corp and Civeo Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.