Correlation Between Nine Energy and JPMorgan BetaBuilders

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

By analyzing existing cross correlation between Nine Energy Service and JPMorgan BetaBuilders Mid, you can compare the effects of market volatilities on Nine Energy and JPMorgan BetaBuilders 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 Nine Energy with a short position of JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and JPMorgan BetaBuilders.

Diversification Opportunities for Nine Energy and JPMorgan BetaBuilders

0.63

Correlation Coefficient

Nine Energy  JPMorgan BetaBuilders

Poor diversification

The 3 months correlation between Nine and JPMorgan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and JPMorgan BetaBuilders Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders Mid and Nine Energy 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 Nine Energy Service are associated (or correlated) with JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders Mid has no effect on the direction of Nine Energy i.e., Nine Energy and JPMorgan BetaBuilders go up and down completely randomly.

Pair Corralation between Nine Energy and JPMorgan BetaBuilders

Given the investment horizon of 90 days Nine Energy Service is expected to generate 7.66 times more return on investment than JPMorgan BetaBuilders. However, Nine Energy is 7.66 times more volatile than JPMorgan BetaBuilders Mid. It trades about 0.11 of its potential returns per unit of risk. JPMorgan BetaBuilders Mid is currently generating about 0.26 per unit of risk. If you would invest  117.00  in Nine Energy Service on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Nine Energy Service or generate 44.44% return on investment over 90 days.

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

Nine Energy Service  vs.  JPMorgan BetaBuilders Mid

Nine Energy Service

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Energy Service are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Nine Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan BetaBuilders Mid

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan BetaBuilders Mid are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, JPMorgan BetaBuilders exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nine Energy and JPMorgan BetaBuilders

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

The idea behind Nine Energy Service and JPMorgan BetaBuilders Mid 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.