Correlation Between Weatherford International and Archrock

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

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

Diversification Opportunities for Weatherford International and Archrock

0.34

Correlation Coefficient

Weatherford International  Archrock

Weak diversification

The 3 months correlation between Weatherford and Archrock is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Weatherford International 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 Weatherford International PLC are associated (or correlated) with Archrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archrock has no effect on the direction of Weatherford International i.e., Weatherford International and Archrock go up and down completely randomly.

Pair Corralation between Weatherford International and Archrock

Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the Archrock. In addition to that, Weatherford International is 1.01 times more volatile than Archrock. It trades about -0.13 of its total potential returns per unit of risk. Archrock is currently generating about 0.05 per unit of volatility. If you would invest  2,472  in Archrock on December 28, 2024 and sell it today you would earn a total of  172.00  from holding Archrock or generate 6.96% return on investment over 90 days.

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

Weatherford International PLC  vs.  Archrock

Weatherford International

Risk-Adjusted Performance

Very Weak

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

Archrock

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Weatherford International and Archrock

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

The idea behind Weatherford International PLC and Archrock 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.