Correlation Between NOV and Ranger Energy

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

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

Diversification Opportunities for NOV and Ranger Energy

-0.06

Correlation Coefficient

NOV  Ranger Energy

Good diversification

The 3 months correlation between NOV and Ranger is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and Ranger Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ranger Energy Services and NOV 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 NOV Inc are associated (or correlated) with Ranger Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ranger Energy Services has no effect on the direction of NOV i.e., NOV and Ranger Energy go up and down completely randomly.

Pair Corralation between NOV and Ranger Energy

Considering the 90-day investment horizon NOV Inc is expected to under-perform the Ranger Energy. But the stock apears to be less risky and, when comparing its historical volatility, NOV Inc is 1.08 times less risky than Ranger Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Ranger Energy Services is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,063  in Ranger Energy Services on September 18, 2024 and sell it today you would earn a total of  478.00  from holding Ranger Energy Services or generate 44.97% return on investment over 90 days.

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

NOV Inc  vs.  Ranger Energy Services

NOV Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ranger Energy Services

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NOV and Ranger Energy

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

The idea behind NOV Inc and Ranger Energy Services 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.