Correlation Between Helix Energy and Liberty Oilfield

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

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

Diversification Opportunities for Helix Energy and Liberty Oilfield

0.89

Correlation Coefficient

Helix Energy  Liberty Oilfield

Very poor diversification

The 3 months correlation between Helix and Liberty is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Helix Energy Solutions and Liberty Oilfield Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Oilfield Services and Helix 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 Helix Energy Solutions are associated (or correlated) with Liberty Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Oilfield Services has no effect on the direction of Helix Energy i.e., Helix Energy and Liberty Oilfield go up and down completely randomly.

Pair Corralation between Helix Energy and Liberty Oilfield

Considering the 90-day investment horizon Helix Energy Solutions is expected to generate 0.8 times more return on investment than Liberty Oilfield. However, Helix Energy Solutions is 1.26 times less risky than Liberty Oilfield. It trades about -0.34 of its potential returns per unit of risk. Liberty Oilfield Services is currently generating about -0.33 per unit of risk. If you would invest  1,168  in Helix Energy Solutions on March 18, 2024 and sell it today you would lose (319.00) from holding Helix Energy Solutions or give up 27.31% of portfolio value over 90 days.

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

Helix Energy Solutions  vs.  Liberty Oilfield Services

Helix Energy Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helix Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Liberty Oilfield Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Oilfield Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Helix Energy and Liberty Oilfield

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

The idea behind Helix Energy Solutions and Liberty Oilfield 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.