Correlation Between Bristow and Liberty Oilfield

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

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

Diversification Opportunities for Bristow and Liberty Oilfield

0.19

Correlation Coefficient

Bristow  Liberty Oilfield

Average diversification

The 3 months correlation between Bristow and Liberty is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and Liberty Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Oilfield 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 Liberty Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Oilfield Services has no effect on the direction of Bristow i.e., Bristow and Liberty Oilfield go up and down completely randomly.

Pair Corralation between Bristow and Liberty Oilfield

Given the investment horizon of 90 days Bristow Group is expected to generate 0.82 times more return on investment than Liberty Oilfield. However, Bristow Group is 1.22 times less risky than Liberty Oilfield. It trades about -0.01 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about -0.03 per unit of risk. If you would invest  3,918  in Bristow Group on September 2, 2024 and sell it today you would lose (96.00) from holding Bristow Group or give up 2.45% of portfolio value over 90 days.

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

Bristow Group  vs.  Liberty Oilfield 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.

Liberty Oilfield Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Oilfield Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Liberty Oilfield is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bristow and Liberty Oilfield

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

The idea behind Bristow Group and Liberty Oilfield 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.