Correlation Between Nextier Oilfield and Capital Drilling

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

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

Diversification Opportunities for Nextier Oilfield and Capital Drilling

0.55

Correlation Coefficient

Nextier Oilfield  Capital Drilling

Very weak diversification

The 3 months correlation between Nextier and Capital is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nextier Oilfield Solutions and Capital Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Drilling and Nextier Oilfield 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 Nextier Oilfield Solutions are associated (or correlated) with Capital Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Drilling has no effect on the direction of Nextier Oilfield i.e., Nextier Oilfield and Capital Drilling go up and down completely randomly.

Pair Corralation between Nextier Oilfield and Capital Drilling

If you would invest  8,557  in Capital Drilling on January 24, 2024 and sell it today you would earn a total of  1,003  from holding Capital Drilling or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.61%
Values	Daily Returns

Nextier Oilfield Solutions  vs.  Capital Drilling

Nextier Oilfield Sol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextier Oilfield Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Nextier Oilfield is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Capital Drilling

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Drilling are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Capital Drilling may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Nextier Oilfield and Capital Drilling

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

The idea behind Nextier Oilfield Solutions and Capital Drilling 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.