Correlation Between Nine Energy and Invesco National

Can any of the company-specific risk be diversified away by investing in both Nine Energy and Invesco National 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 Invesco National 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 Invesco National AMT Free, you can compare the effects of market volatilities on Nine Energy and Invesco National 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 Invesco National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Energy and Invesco National.

Diversification Opportunities for Nine Energy and Invesco National

0.64

Correlation Coefficient

Nine Energy  Invesco National

Poor diversification

The 3 months correlation between Nine and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nine Energy Service and Invesco National AMT Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco National AMT 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 Invesco National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco National AMT has no effect on the direction of Nine Energy i.e., Nine Energy and Invesco National go up and down completely randomly.

Pair Corralation between Nine Energy and Invesco National

Given the investment horizon of 90 days Nine Energy Service is expected to generate 18.2 times more return on investment than Invesco National. However, Nine Energy is 18.2 times more volatile than Invesco National AMT Free. It trades about 0.0 of its potential returns per unit of risk. Invesco National AMT Free is currently generating about -0.07 per unit of risk. If you would invest  115.00  in Nine Energy Service on September 27, 2024 and sell it today you would lose (17.90) from holding Nine Energy Service or give up 15.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Nine Energy Service  vs.  Invesco National AMT Free

Nine Energy Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nine Energy Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nine Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco National AMT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco National AMT Free has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Invesco National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nine Energy and Invesco National

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

The idea behind Nine Energy Service and Invesco National AMT Free 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.