Correlation Between Trican Well and Weatherford International

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

By analyzing existing cross correlation between Trican Well Service and Weatherford International Plc, you can compare the effects of market volatilities on Trican Well and Weatherford International 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 Trican Well with a short position of Weatherford International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and Weatherford International.

Diversification Opportunities for Trican Well and Weatherford International

-0.03

Correlation Coefficient

Trican Well  Weatherford International

Good diversification

The 3 months correlation between Trican and Weatherford is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and Weatherford International Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weatherford International and Trican Well 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 Trican Well Service are associated (or correlated) with Weatherford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weatherford International has no effect on the direction of Trican Well i.e., Trican Well and Weatherford International go up and down completely randomly.

Pair Corralation between Trican Well and Weatherford International

If you would invest  342.00  in Trican Well Service on September 30, 2024 and sell it today you would lose (3.00) from holding Trican Well Service or give up 0.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Trican Well Service  vs.  Weatherford International Plc

Trican Well Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trican Well Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Trican Well is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Weatherford International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weatherford International Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Weatherford International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Trican Well and Weatherford International

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

The idea behind Trican Well Service and Weatherford International Plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.