Correlation Between Nextier Oilfield and Archrock

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

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

Diversification Opportunities for Nextier Oilfield and Archrock

0.85

Correlation Coefficient

Nextier Oilfield  Archrock

Very poor diversification

The 3 months correlation between Nextier and Archrock is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions and Archrock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archrock and Nextier Oilfield 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 Nextier Oilfield Solutions 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 Nextier Oilfield i.e., Nextier Oilfield and Archrock go up and down completely randomly.

Pair Corralation between Nextier Oilfield and Archrock

If you would invest  1,889  in Archrock on August 31, 2024 and sell it today you would earn a total of  673.00  from holding Archrock or generate 35.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Nextier Oilfield Solutions  vs.  Archrock

Nextier Oilfield Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextier Oilfield Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nextier Oilfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Archrock

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Archrock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Archrock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextier Oilfield and Archrock

The main advantage of trading using opposite Nextier Oilfield and Archrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextier Oilfield 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 Nextier Oilfield Solutions 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..