Correlation Between Bristow and KLX Energy

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

By analyzing existing cross correlation between Bristow Group and KLX Energy Services, you can compare the effects of market volatilities on Bristow and KLX Energy 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 KLX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristow and KLX Energy.

Diversification Opportunities for Bristow and KLX Energy

0.81

Correlation Coefficient

Bristow  KLX Energy

Very poor diversification

The 3 months correlation between Bristow and KLX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and KLX Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Energy Services 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 KLX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Energy Services has no effect on the direction of Bristow i.e., Bristow and KLX Energy go up and down completely randomly.

Pair Corralation between Bristow and KLX Energy

Given the investment horizon of 90 days Bristow Group is expected to generate 0.53 times more return on investment than KLX Energy. However, Bristow Group is 1.9 times less risky than KLX Energy. It trades about 0.03 of its potential returns per unit of risk. KLX Energy Services is currently generating about -0.04 per unit of risk. If you would invest  2,713  in Bristow Group on September 20, 2024 and sell it today you would earn a total of  721.00  from holding Bristow Group or generate 26.58% return on investment over 90 days.

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

Bristow Group  vs.  KLX Energy Services

Bristow Group

Risk-Adjusted Performance

0 of 100

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.

KLX Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLX Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Bristow and KLX Energy

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

The idea behind Bristow Group and KLX Energy Services 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.