Correlation Between ION Geophysical and Dawson Geophysical

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Can any of the company-specific risk be diversified away by investing in both ION Geophysical and Dawson Geophysical 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 ION Geophysical and Dawson Geophysical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ION Geophysical and Dawson Geophysical, you can compare the effects of market volatilities on ION Geophysical and Dawson Geophysical 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 ION Geophysical with a short position of Dawson Geophysical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ION Geophysical and Dawson Geophysical.

Diversification Opportunities for ION Geophysical and Dawson Geophysical

0.64
  Correlation Coefficient

Poor diversification

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

Pair Corralation between ION Geophysical and Dawson Geophysical

If you would invest  135.00  in Dawson Geophysical on December 30, 2023 and sell it today you would earn a total of  7.00  from holding Dawson Geophysical or generate 5.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy4.55%
ValuesDaily Returns

ION Geophysical  vs.  Dawson Geophysical

 Performance 
       Timeline  
ION Geophysical 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days ION Geophysical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ION Geophysical is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
Dawson Geophysical 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dawson Geophysical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

ION Geophysical and Dawson Geophysical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ION Geophysical and Dawson Geophysical

The main advantage of trading using opposite ION Geophysical and Dawson Geophysical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ION Geophysical position performs unexpectedly, Dawson Geophysical 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 Dawson Geophysical will offset losses from the drop in Dawson Geophysical's long position.
The idea behind ION Geophysical and Dawson Geophysical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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