Correlation Between Weatherford International and Ranger Energy

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

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

Diversification Opportunities for Weatherford International and Ranger Energy

0.58

Correlation Coefficient

Weatherford International  Ranger Energy

Very weak diversification

The 3 months correlation between Weatherford and Ranger is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International Plc 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 Weatherford International 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 Weatherford International Plc 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 Weatherford International i.e., Weatherford International and Ranger Energy go up and down completely randomly.

Pair Corralation between Weatherford International and Ranger Energy

If you would invest  1,182  in Ranger Energy Services on September 5, 2024 and sell it today you would earn a total of  506.00  from holding Ranger Energy Services or generate 42.81% return on investment over 90 days.

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

Weatherford International Plc  vs.  Ranger Energy Services

Weatherford International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weatherford International Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Weatherford International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Ranger Energy Services

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 26 (%) 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 Weatherford International and Ranger Energy

The main advantage of trading using opposite Weatherford International and Ranger Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International 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 Weatherford International Plc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.