Correlation Between Bristow and Core Laboratories

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

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

Diversification Opportunities for Bristow and Core Laboratories

0.57

Correlation Coefficient

Bristow  Core Laboratories

Very weak diversification

The 3 months correlation between Bristow and Core is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Core Laboratories NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Laboratories and Bristow 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 Bristow Group 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 Bristow i.e., Bristow and Core Laboratories go up and down completely randomly.

Pair Corralation between Bristow and Core Laboratories

Given the investment horizon of 90 days Bristow Group is expected to generate 0.81 times more return on investment than Core Laboratories. However, Bristow Group is 1.23 times less risky than Core Laboratories. It trades about -0.01 of its potential returns per unit of risk. Core Laboratories NV is currently generating about -0.06 per unit of risk. If you would invest  3,360  in Bristow Group on December 28, 2024 and sell it today you would lose (105.00) from holding Bristow Group or give up 3.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Bristow Group  vs.  Core Laboratories NV

Bristow Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bristow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bristow is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Core Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Laboratories NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bristow and Core Laboratories

The main advantage of trading using opposite Bristow and Core Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bristow 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 Bristow Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.