Correlation Between Bristow and NPK International

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

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

Diversification Opportunities for Bristow and NPK International

0.59

Correlation Coefficient

Bristow  NPK International

Very weak diversification

The 3 months correlation between Bristow and NPK is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bristow Group and NPK International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPK International 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 NPK International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPK International has no effect on the direction of Bristow i.e., Bristow and NPK International go up and down completely randomly.

Pair Corralation between Bristow and NPK International

Given the investment horizon of 90 days Bristow is expected to generate 1.86 times less return on investment than NPK International. But when comparing it to its historical volatility, Bristow Group is 1.12 times less risky than NPK International. It trades about 0.03 of its potential returns per unit of risk. NPK International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  705.00  in NPK International on October 10, 2024 and sell it today you would earn a total of  46.00  from holding NPK International or generate 6.52% return on investment over 90 days.

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

Bristow Group  vs.  NPK International

Bristow Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bristow Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

NPK International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NPK International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward-looking signals, NPK International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bristow and NPK International

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

The idea behind Bristow Group and NPK International 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 Global Correlations module to find global opportunities by holding instruments from different markets.