Correlation Between Bristow and National Energy

Can any of the company-specific risk be diversified away by investing in both Bristow and National 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 National 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 National Energy Services, you can compare the effects of market volatilities on Bristow and National 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 National Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bristow and National Energy.

Diversification Opportunities for Bristow and National Energy

-0.42

Correlation Coefficient

Bristow  National Energy

Very good diversification

The 3 months correlation between Bristow and National is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and National Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National 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 National Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Energy Services has no effect on the direction of Bristow i.e., Bristow and National Energy go up and down completely randomly.

Pair Corralation between Bristow and National Energy

Given the investment horizon of 90 days Bristow Group is expected to generate 0.78 times more return on investment than National Energy. However, Bristow Group is 1.28 times less risky than National Energy. It trades about 0.06 of its potential returns per unit of risk. National Energy Services is currently generating about -0.04 per unit of risk. If you would invest  3,399  in Bristow Group on September 13, 2024 and sell it today you would earn a total of  254.00  from holding Bristow Group or generate 7.47% return on investment over 90 days.

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

Bristow Group  vs.  National Energy Services

Bristow Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bristow Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Bristow may actually be approaching a critical reversion point that can send shares even higher in January 2025.

National Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Bristow and National Energy

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

The idea behind Bristow Group and National 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.