Correlation Between Cactus and Bristow

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

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

Diversification Opportunities for Cactus and Bristow

0.86

Correlation Coefficient

Cactus  Bristow

Very poor diversification

The 3 months correlation between Cactus and Bristow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Cactus Inc and Bristow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bristow Group and Cactus 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 Cactus Inc are associated (or correlated) with Bristow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bristow Group has no effect on the direction of Cactus i.e., Cactus and Bristow go up and down completely randomly.

Pair Corralation between Cactus and Bristow

Considering the 90-day investment horizon Cactus Inc is expected to under-perform the Bristow. But the stock apears to be less risky and, when comparing its historical volatility, Cactus Inc is 1.05 times less risky than Bristow. The stock trades about -0.07 of its potential returns per unit of risk. The Bristow Group is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,752  in Bristow Group on November 19, 2024 and sell it today you would lose (108.00) from holding Bristow Group or give up 2.88% of portfolio value over 90 days.

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

Cactus Inc  vs.  Bristow Group

Cactus Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cactus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bristow Group

Risk-Adjusted Performance

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.

Pair Trading with Cactus and Bristow

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

The idea behind Cactus Inc and Bristow Group 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.